Japanese megabanks and insurers collectively net bought 5.4 trillion yen (approximately $34 billion) in Japanese government bonds with maturities of two years or more in the five months leading up to August this year, marking the largest net purchase for the same period since early 2023, according to calculations by the Financial Times. Concurrently, banks' net selling of foreign bonds surged to 2.5 trillion yen in September, with the total net selling of foreign bonds in the first nine months of 2026 reaching a new high for the period since 2005. This trend is attracting significant market attention, as investors worry that sustained and expanding capital repatriation could push up the yen and impact the US and European government bond markets. Analysts suggest that soaring domestic yields in Japan to multi-decade highs, coupled with rising yen currency hedging costs, are key factors driving local financial institutions to adjust their asset allocation.