Recently, Japan has been reducing its holdings of U.S. Treasuries, reflecting a significant shift in investment strategy.
As of April 2024, Japan's holdings of U.S. Treasuries fell to their lowest level since January 2020, decreasing by 18.5% year-over-year to $1.082 trillion.
This trend is driven by rising yields on Japanese government bonds, making domestic investments more attractive, and increasing hedging costs for foreign investors due to the Federal Reserve's rate hikes.
The Bank of Japan's relaxation of yield curve control has further encouraged this repatriation of capital.