OUTFLOW FROM JAPAN: Foreigners flee Japanese stocks: Nikkei has just reported that foreign investors are moving money out of the country. According to the Tokyo Stock Exchange, last week foreign funds were net sellers for the third week consecutively. Why? (1) Uncertainty around corporate tax cuts persists; (2) Hopes of improved earnings in exporters dwindled after the yen halted its fall. (3) Discussion on consumption tax hikes lingers and weighed on investors sentiment.

OUTFLOW FROM THE US: In order to offset the capital outflows from Japanese equities, Japanese authorities lead record sales from Treasuries. According to a recent Reuters note,  Japan (and also China) led a record exodus from US Treasuries in June, with data showing they accounted for almost all of a record $40.8B of net foreign selling. Japan trimmed its holdings for a third straight month to $1.0834T.

Fears of a Fed tapering or a maneuver to offset an outflow from Japan? Asked about it, a Japanese lawmaker said the fears of Fed tapering weren't behind the sales.

Best,

Àlex FUSTE MOZO

Chief Economist