In April, Japanese investors made a surprising and dramatic move by selling off a huge amount of German government bonds. According to new data released by Japan’s Ministry of Finance, they sold nearly 1.5 trillion yen worth of these bonds. That’s about $10.4 billion. This was the largest sell-off of German bonds by Japanese investors in over a decade — since 2014.
To understand how big this is, imagine a group of investors who had been quietly investing in something for years. Suddenly, they pull out almost all at once. That’s what happened here. It wasn’t a small shift. It was a massive change that caught the attention of markets around the world.
Germany had recently made a big decision that might have caused concern among investors. The country chose to ease some of its strict borrowing rules. This change was made to allow for a new infrastructure fund of 500 billion euros — which equals about $546 billion — and also to boost defense spending. As a result, German bond yields surged in March.
Higher yields might sound good, but they often signal higher risk or big changes ahead. That sudden rise likely made Japanese investors nervous. So, in April, they sold off German bonds faster than they have in years. Commerzbank, a major German lender, confirmed this was the largest monthly sale of German bonds by Japanese investors since 2014.
What Happened to U.S. Treasuries?
Japanese investors didn’t just step away from German bonds. They also made a big move in the U.S. government bond market. In April, they sold nearly 1.1 trillion yen in long-term U.S. Treasuries — around $7.6 billion. This was the largest sell-off since October last year, according to Commerzbank.
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Why would they do this? In April, U.S. bond yields became very unstable. Bond yields go up and down based on how much people trust a country’s government to manage its money well. That month, U.S. yields jumped more than 70 basis points in just one week. That’s a big and fast change, which made many investors uneasy.
These wild movements followed a key announcement by U.S. President Donald Trump. He revealed a new round of tariffs as part of his so-called “Liberation Day” strategy. When tariffs are added, it can create uncertainty in the economy. For investors, that can make U.S. bonds feel less like a “safe bet.” So, just like they did with German bonds, Japanese investors started pulling out of U.S. Treasuries too.
Germany Regains Safe Haven Status
Interestingly, while U.S. bonds were going through a rough patch in April, German bonds started to look safer again — at least for a short while. Even though their yields had shot up in March due to the new spending plans, those yields dropped sharply in April.
This drop in yields meant more people were buying German bonds again, which often happens when investors are searching for safer places to put their money. So, while Japanese investors were selling off, other investors may have seen Germany as a good option during a time when U.S. markets were shaky.
Japanese investors are the biggest foreign holders of U.S. Treasuries and a major holder of euro zone government bonds, including Germany’s. So, when they make big changes in where they put their money, the rest of the financial world pays close attention.
These moves are not just about numbers on a screen. They reflect deep shifts in how confident investors feel about the world’s biggest economies. April showed just how quickly those feelings can change.
