Hedge Funds Rein In Japan Bets, Saddling Banks With Unsold Bonds

Even risk-taking hedge funds are holding off on Japanese assets as weekend elections loom and super-long bond yields hit 25-year highs.

Many traders are awaiting more clarity from the results before placing any bets as the ruling coalition is seen likely to lose its majority in Sunday’s upper house election. Unresolved tariff talks with the US and upcoming corporate earnings are also causing hedge funds to sit out trading in bonds, equities and currencies for now, market participants said.

“Carrying any position right now is like juggling porcupines,” said Calvin Yeoh, portfolio manager at hedge fund Blue Edge Advisors ...