This is a symptom of the end of the global carry trade era. As the BOJ normalizes policy and JGB yields become more attractive, Japanese capital repatriation will pressure French OATs and peripheral European debt. This fits a larger trend of rising sovereign risk premia and de-globalization of capital flows.

French bonds

Japanese investors hold far more French bonds than benchmark weightings recommend, raising the threat of a new wave of selling that could deepen France's debt rout.