At a time when American assets are losing favor, Japanese stocks and bonds are gaining favor. Foreign capital inflows in April are expected to reach a record high.

With global funds looking for alternatives to US assets, Japanese bonds and stocks are expected to attract the largest monthly inflow of foreign funds on record. According to preliminary data released by the Japanese Ministry of Finance on Thursday, foreign investors have net bought 9.64 trillion (approximately $67.5 billion) worth of Japanese bonds and stocks since April. Specifically, about two-thirds of the foreign inflow went into the bond market, reaching a historical high in bond purchases. Foreign buying of Japanese stocks also reached a two-year high. The latest data on foreign inflows supports speculation that global funds are withdrawing from the US market, due to concerns that the Trump administration's tariff policies may lead to stagnation in the US economy. At the same time, concerns have heightened over the independence of the Federal Reserve as President Trump has repeatedly called for interest rate cuts and threatened to dismiss Fed Chairman Powell (although he later said he had no intention of firing Powell). Shoki Omori, Chief Strategist at Mizuho Securities, stated, "It can be imagined that foreign investors view Japanese financial assets as safe assets, hence expanding their holdings." "The yen remains relatively weak, which may lead people to believe that Japanese financial assets are undervalued." However, Shoki Omori added that with recent remarks from Trump indicating a softened stance, the inflow of foreign funds this week may pause.