Japanese Banks and Insurers Shift Capital to Domestic Bonds as Yields Rise

Key Facts

Japanese banks and insurers are shifting capital back into domestic bonds as yields reach attractive levels. The Financial Times reported that major financial institutions are repatriating capital to invest in Japanese government bonds, marking a significant reversal from decades of seeking higher returns in overseas markets.

The surge in Japanese government bond yields has made domestic fixed income more attractive relative to foreign assets, prompting a reversal of long-standing carry trade and investment patterns. This institutional shift follows a period of strong trade data, with Japan's current account recording a surplus of 4062 billion yen on October 7, 2026.