Sumitomo Mitsui DS Asset Management has liquidated its entire portfolio of French government bonds due to concerns over the country's fiscal stability. France currently faces a debt-to-GDP ratio of approximately 119%, with 10-year borrowing costs reaching 4.96% last week, the highest level recorded since 2002.
Despite the sell-off, France successfully auctioned €12 billion in long-term bonds on October 1, with demand exceeding supply by two times. Market participants are now awaiting official trading data from Japan's Ministry of Finance, scheduled for release on October 8, to determine the broader scale of Japanese divestment from foreign debt.
Previous reports from the Japanese Ministry of Finance indicated that investors sold a net ¥684.5 billion ($4.3 billion) in foreign bonds during the week ending September 26, following a net sale of ¥1.9 trillion ($12 billion) the prior week. These figures aggregate all foreign holdings without specifying individual countries.
The potential impact on digital assets remains a point of concern for traders. During the yen volatility in August 2024, Bitcoin and Ethereum experienced declines of up to 20%. Analysts note that the yen carry trade, estimated by the Bank for International Settlements at $250 billion before the August crash, continues to influence global market liquidity.
