Japanese investors sold a record ¥3.42 trillion in foreign bonds in February 2026, marking the largest monthly sale since October 2024. The Ministry of Finance's preliminary data indicates that most of these sales occurred in the week ending February 20. Market analysts suggest that rising domestic yields and falling Japanese government bond prices, which have led to impairment losses for life insurers, are driving this trend. Ayako Sera, Senior Market Strategist at Sumitomo Mitsui Trust Bank, noted that the need to adjust profitability amid these conditions may be prompting investors to reduce their foreign bond holdings. The shift in capital flows is being closely watched for further signs of funds returning to Japan.