"Japanese investors bought a record JPY 2.55trn of foreign bonds last week and JPY 221bn of foreign stocks. By contrast, foreigners bought just JPY 27.4bn of Japanese bonds and JPY 306.8bn of Japanese stocks.

The data is consistent with our view that "Abenomics" is being resuscitated as extra-low yields in Japan push investors into higher-yielding assets especially abroad. Our 4-week moving sum measure has accelerated sharply over the past four weeks (see chart). We stressed yesterday that higher US yields (10-years in particular) are pulling USDJPY higher - a key factor driving Japanese investors abroad.

On this front, this week's barrage of Fed rhetoric could continue to boost US yields given that markets have pushed back expectations for Fed tightening so aggressively during the first few months of 2016. Our rates strategists forecast US Treasury yields rising to 1.60% (1.49% now) by year-end and we see USDJPY at 108 in coming months".

BNPP targets USD/JPY at 108 by end of Q3, and 110 by end of Q4.