Global Market: Japan pension fund strategy may redraw global bond and currency markets

Japanese Finance Minister Satsuki Katayama has suggested that the $1.8 trillion Government Pension Investment Fund (GPIF) and other retirement funds should consider increasing allocations to domestic assets, fuelling speculation of a reversal in Japan's decade-long overseas investment trend. Markets reacted swiftly, with the yen strengthening about 0.4% against the US dollar and Japan's 10-year government bond yields recording one of their biggest single-day declines in nearly two years. Japan's foreign asset holdings reached a record 561.75 trillion yen ($3.53 trillion) in 2025, with around $930 billion managed by GPIF, and any meaningful reallocation could significantly alter global investment flows and push up long-term borrowing costs in other major economies.