Investors sold U.S., German bonds in June

Reuters TOKYO (Reuters) — Japanese investors sold U.S. bonds in June amid expectations of steady interest rate hikes in the United States, while offloading low-yielding German debt, government data showed on Wednesday.

The investors sold a net ¥455.8 billion of U.S. bonds in June, after selling a net ¥2.071 trillion in May.

They sold a net ¥77.7 billion of German bonds in June, after dropping a net ¥712 billion the month before.

“The June data shows that U.S. bonds are not an easy buy for Japanese investors at a time when the Federal Reserve is hiking interest rates. As for German bonds, their yields are too low,” said Teruyoshi Sotome, senior financial analyst at Mizuho Securities.

The market value of a bond tends to decrease when interest rates rise.

Finance Ministry data on Wednesday showed Japanese investors bought a net ¥563.6 billion of French debt in June, after selling a net ¥157.1 billion in May.

They also purchased a net ¥58.2 billion of British bonds in June.

“Within the European bond sphere, German bond yields are too low, while peripheral debt like Italian bonds offer higher yields but come with political risks. Therefore investors are opting for ‘semi-core’ bonds like French debt,” Sotome said.

The German 10-year bund yield moved between 0.30 and 0.52 percent in June, while its French counterpart ranged between 0.66 to 0.92 percent over the same period.Speech

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