Japan Pension Fund Won’t Buy Domestic Bonds

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During an interview in Davos, Switzerland, the president of the GPIF said “We won’t buy more JGBs… With inflation picking up, the room for JGB prices to increase is very limited. When the ones we hold mature, we will consider investing in other assets.” The GPIF manages 124 trillion yen ($1.21 trillion) in assets.

Mitani stated the next assets the fund will look into is Japanese stocks as well as foreign equities & bonds. According to Bank of America Merrill Lynch indexes, Japanese governmet securities saw a 2.1% gain in their debt, whilst the Italian Government Debt returned 7.3%.

Last November gave us a sign that Prime Minister Shinzo Abe’s stimulus helped in getting the country out of it’s 15 of deflation. Their inflation rose to 1.2%, which was the fastest rate of rise since 2008. This rate just reached above its Euro equivalent in October.

The securities’ fixed payments are eroded by rising consumer prices, which in turn decreases the demand for bonds.