Japanese money has started returning home, but uncertainty over the peak in domestic bond yields and the Bank of Japan’s interest-rate path is delaying a much larger repatriation of overseas assets. The BOJ’s rate hike last week, pledges to address inflation and a reported check of foreign-exchange market conditions have likely discouraged another wave of speculative bets against the yen. However, two dovish dissenting votes at the meeting and another bond selloff this week have left major investors unsure how far rates will rise. The yen traded near 159 per dollar on Friday, after surrendering most of its early-September gains. It is down about 1% for the year, following a near four-decade low in July just below 164 per dollar. Speculative positioning shifted from a deep net short to a net long of $9.7 billion in the first two weeks of September, the strongest long position since July 2025. Japanese 10-year JGB (Japanese government bond) yields have risen two percentage points in less than two years to above 3%, a 30-year high, making some hedged overseas bonds less attractive than domestic debt. Japanese investors bought 4.8 trillion yen of sovereign debt last month, while HSBC estimates banks sold about $70 billion of foreign bonds this year, compared with $35 billion of purchases last year. Life insurers hold 438.6 trillion yen ($2.78 trillion) in assets, but the scale of any portfolio shift is unclear. The $1.8 trillion Government Pension Investment Fund (Japan’s public pension investor) is a potential catalyst after Japan’s finance minister encouraged it to increase domestic allocations. Analysts say an official GPIF shift or hard data showing higher domestic JGB holdings could prompt other investors to follow. Rising U.S. yields and expectations of further Federal Reserve tightening could limit the BOJ’s ability to sustain a yen rally. State Street Global Advisors’ Aaron Hurd said repatriation could gain momentum in 2027, while Nomura Securities’ Naka Matsuzawa said the yen could rise beyond 150 once major life insurers begin repatriating, though that point has not yet arrived.