BREAKING: Japanese investors sold -$29.6 billion in US Treasuries, agency, and local authority debt in Q1 2026, the largest quarterly sale since Q2 2022. This marks the first quarterly outflow since Q4 2024 and follows 11 quarters of purchases of the last 12. Agency debt includes mortgage-backed securities (MBS) and bonds from government-sponsored entities, while local authority debt includes municipal bonds issued by US states, cities, and local governments. This comes as rising interest rate expectations, driven by a rebound in inflation, weighed on bond prices and prompted Japanese investors to cut US bond holdings. Japan is the largest foreign holder of US Treasuries, at $1.24 trillion, ahead of the UK, at $897 billion, and China, at $693 billion. Japanese investors are aggressively dumping US bonds.