Jason Douglas

And since 1990, rates have been very low.

The Japanese economy was

as everyone will remember, battling deflation for most of that time.

But then, like lots of other economies since the pandemic, we started to see inflation in Japan.

This has started to stick around, even though the economy is kind of weak.

And so the Bank of Japan is now starting very slowly to lift interest rates after all this time.

That's right.

One thing people are expecting or people are hoping for is that slightly higher rates in Japan might tempt Japanese investors to bring some money back home.

So Japanese pension funds insurers, ordinary mom and pop investors are, you know, big investors in stock markets and bond markets around the world.

High rates in Japan might tempt them to bring some of that money back home.

So we did see this, for instance, in 2022.

There was quite a big repatriation of funds from overseas.

That would help support the yen, which would help in the inflation front.

And it might help perk up demand for Japanese government bonds, which the government is eager to sell to finance its fiscal plans.

So yes, we'll be watching to see if this gradually tempts Japanese investors home.

There are lots of reasons why bond yields and interest rates are going up.

Investors are still anxious about inflation.

Investors are still anxious about government spending right across the world.

But...

It is true that Japanese investors have been big players in bond markets, especially the US Treasury market, for really quite a long time and have had some effect in keeping interest rates down in the US and in other places.