Investors redirect capital from US to Japan amid trade tensions — Pimco

According to Pacific Investment Management Co. (Pimco), trade tensions are diverting investments from the US to Japan, making the Asian nation a key destination for capital. This shift is clearly reflected in record inflows of 9.16 trillion yen ($62.32 billion) in April.

Japan's bond market has begun to stabilize after authorities cut sales of longer-dated debt. Pimco analysts anticipate increased investor appetite for Japanese bonds, seeing them as an attractive alternative to US securities, particularly given the current yen-dollar exchange rate.

Meanwhile, Bloomberg notes that 25% US tariffs on Japanese goods, including automobiles, auto parts, steel, and aluminum, take effect August 1. As the deadline approaches, pressure is mounting on Tokyo and Washington to reach a compromise agreement. According to Ben Ferguson, co-head of Pimco in Japan, the Asian nation remains a key US partner, with both sides having strong incentives to resolve their trade disputes.