Japan's Net Sales of Foreign Debt Reaches Record

Although one robin does not make a spring, the increased reluctance of Japanese retail and institutional investors to hold GSE debt is worrisome. Bloomberg reports that Japanese retail and institutional investors are unloading foreign debt due to currency volatility and are particularly leery of Fannie and Freddie securities.

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``Although Fannie and Freddie are being aided by the government, there still is no guarantee on their debt, so it is difficult to hold it,'' said Daisuke Uno, chief bond and currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo. ``Without a guarantee, nobody will do anything as it's too risky, so they sold the bonds.''