One reason why Australian stocks and the dollar are struggling became a little clearer this morning. And it has little to do with Australia or US tapering. Japan released its weekly foreign stock and bond buying flows and the news is money is flooding home.
After last week’s 804 billion yen repatriation in bonds and 136 billion yen in stocks, this week we have 1.1 trillion yen in bonds and 104 billion for stocks.
It’s no wonder as well that the US dollar has suddenly reversed and is falling against the yen.
Abenomics seems a bit confused at this point. If rising inflation and yields is going to bring money home to invest in local bonds then the yen is going to rise.