Japan’s life insurance companies are exercising caution when it comes to buying domestic government bonds, despite expectations that they would increase their purchases following the Bank of Japan’s decision to normalize monetary policy and raise interest rates. The hesitation is attributed to heightened market volatility and low liquidity, which is exerting upward pressure on bond yields. This cautious approach from a key investor group contrasts with the behavior of foreign investors, who have been buying Japanese government bonds at a record pace recently. The disparity in investment strategies between domestic life insurers and foreign investors could have significant implications for Japan’s bond market and overall economic landscape.
