Japanese investors offload over $20 billion in bonds amid Trump’s tariff turmoil

Japanese investors have sold more than $20 billion in international bonds over the past two weeks, as market turbulence triggered by President Donald Trump’s tariff announcements in early April rippled through global financial markets.

According to preliminary data from Japan’s Ministry of Finance, private institutions, including banks and pension funds, sold $17.5 billion in long-dated foreign bonds in the week to April 4. An additional $3.6 billion was sold in the following week. This marks one of the largest outflows from Japan in any two-week period since records began in 2005, Caliber.Az reports via foreign media.

Japan, which holds the world’s largest foreign stockpile of US Treasuries, valued at $1.1 trillion, has long been a key player in global bond markets. As a result, its transactions are closely monitored and often seen as a proxy for buying or selling US government debt. The recent sell-off is linked to the volatility triggered by Trump’s “liberation day” tariff announcement on April 2, which sent shockwaves through global stock and bond markets.

In the days following the tariff announcement, Wall Street’s S&P 500 index plunged by 12 percent over four trading days, while US Treasuries experienced a major sell-off, causing 10-year note yields to surge in the week of April 11 by the largest margin since 2001.

Tomoaki Shishido, senior rates strategist at Japanese bank Nomura, speculated that a significant portion of Japan’s bond sales likely involved US Treasuries or US agency bonds. “A substantial proportion of [Japan’s] selling is probably either US Treasuries or US agency bonds,” Shishido said. He added that “some selling of foreign bonds could be from Japanese pension funds rebalancing… or it could be banks or life insurers reducing their interest rate risk.”

The market sell-off, triggered by the tariff news, also led to shifts within Japanese pension funds, whose allocations to international debt and equity were disrupted by the fall in US equities. As a result, these funds were under pressure to sell US government-backed debt, including Treasuries, to bring their portfolios back into balance.

Stefan Angrick, Japan economist at Moody’s Analytics, noted that while the volume of Treasuries sold by Japanese investors was substantial, it was not large enough to fully explain the yield spikes observed in the first two weeks of April. “The headline figures may look chunky, but in bond market terms, they’re barely a ripple,” Angrick said, pointing out that the US Treasury market sees nearly $1 trillion in turnover on average each day.

By Vafa Guliyeva