Deutsche Bank notes uncertainty slowing Japanese capital repatriation

A Deutsche Bank fixed income strategist stated that the repatriation of Japanese overseas assets is being held back by uncertainty over where Japanese bond yields will peak and how much further the Bank of Japan must raise interest rates. The strategist noted that while the fast-money carry trade has unwound, the slow-money trade has not begun.

Major investors remain reluctant to commit heavily to domestic bonds because policymakers have offered few clues about future rate increases. This caution is slowing capital repatriation, which limits the potential for a sustained rally in the yen across global markets.