Japan Faces Historic $12B Equity Outflow as Bond Yields Spike
Investors yanked a record $12 billion from Japanese stocks in a single week as long-dated government bond yields surged to unprecedented levels. The 40-year JGB yield peaked at 3.689% before settling at 3.318% - nearly 70 basis points higher year-to-date. This capital flight coincided with a $9.5 billion global equity exodus, including $5.1 billion from US markets.
The yield explosion follows collapsing demand for Japanese debt after institutional buyers met regulatory quotas. With the Bank of Japan tapering bond purchases and traditional buyers sidelined, the market faces structural pressure. European equities saw a rare $1 billion inflow during the turmoil, highlighting Japan’s disproportionate strain.