Japanese Investors Drive US Sovereign Bond Purchases, Cash Funds Surge to Record Highs Amid Stock Inflows and BOJ Policy Impact

Japanese investors bought the most US sovereign bonds in six months in September, leading to fund flows into higher-yielding debt, which are impacting the yen. Foreign investors turned net buyers of Japanese stocks, buoyed by the Bank of Japan's ultra-easy monetary policy. Money-market funds are attracting cash, with assets surging to an all-time high. Japanese investments in foreign bonds and equities slowed in October due to higher U.S. bond yields and a depreciating yen. Global equity funds saw increased demand as investor sentiment improved following major central banks' policy decisions. Japan experienced the largest equity outflow in seven months as Bank of Japan's policy change sparked selling of banks. Global investors put $77.7 billion into cash in the latest week, on course for around $1.4 trillion inflow in 2023. Cash funds remain popular, set for a record year of inflows at $1.4 trillion in 2023. US bond funds racked up the biggest weekly inflow in three months, while bank loan volumes plunged despite huge deposit inflows, and Fed rescue fund usage surged to a new record high.