Just caught something interesting in the capital flows data. Japanese investors pulled a massive 3.07 trillion yen out of overseas bonds last month, the biggest monthly exodus in over a year. What's driving this? The yields on japanese bond markets have been climbing while US Treasury returns are cooling off, so it's suddenly making more sense to keep money at home.

The numbers are pretty striking actually. They dumped 3.42 trillion yen in foreign long-term bonds alone, which is the highest monthly outflow since October 2024. Meanwhile, they're still buying up foreign stocks though, grabbing 642.1 billion yen last month. Barclays mentioned a lot of this stock buying is tied to Japan's NISA program, that tax-free investment account the government set up to get people to move their cash into equities.

So what we're seeing is kind of a rebalancing—japanese bond yields getting more competitive, foreign bonds less attractive, and at the same time individual Japanese investors are still interested in overseas stocks through their tax-advantaged accounts. It's a pretty clear signal about where capital is flowing when the yield dynamics shift.