Global funds are reducing their exposure to long-term Japanese government bonds, concerned about the slow action of the Bank of Japan.

After the yield on Japanese government bonds finally rose enough to attract global fund managers back after more than a year, many funds have started to withdraw from this market. Institutions such as T. Rowe Price Group Inc., Schroders, and Brandywine Global Investment Management have recently been reducing their exposure to long-term Japanese government bonds, or only holding tactical positions. The latest data from April shows that overseas investors have net sold Japanese super long-term government bonds for the first time since 2024, with sales exceeding purchases. Even though the market generally expects the Bank of Japan to raise interest rates on Tuesday, investors are still worried that it may not tighten monetary policy quickly enough to curb inflation and stabilize the market. For many investors, the attraction of the record high yields this year has been overshadowed by concerns about the slow pace of Bank of Japan policy changes and vulnerability to political pressure.