Nippon Life may keep buying foreign bonds due to Trump impact

Written by Adam Cadle

20/02/2025

Nippon Life has purchased more foreign bonds since October and may keep buying them this year, given the impact of US President Donald Trump, the firm's top investment officer has said.

In an investment strategy update outlined in mid-October, the life insurer had projected its foreign bonds holdings without currency hedges would remain unchanged or decline, while increasing the holding of hedged ones through purchases of private debt.

It had also forecast the dollar would fall to around 145 yen by March as the Federal Reserve cuts short-term interest rates and the Bank of Japan (BOJ) raises its policy rates.

But Trump's policies, many of which the markets view as potentially inflationary, have increased the likelihood the Fed may delay rate cuts, pushing up US Treasury yields and strengthening the dollar.

As a result, the yen may not rapidly appreciate, prompting Nippon Life to change its course and add both FX hedged- and unhedged- foreign bonds to their portfolio, Akira Tsuzuki, executive officer and general manager of finance and investment planning, told Reuters in an interview late on Wednesday.

Investment plans for the fiscal year starting in April are still under discussion, but Nippon Life is considering buying more Treasuries, Tsuzuki said.

"The long-term Treasuries that we aim to invest in still have attractive yields. Given the fall in hedge costs, if we buy now, it would turn out to be a very good investment in the long run," he said.

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