One cut too many for Mrs Watanabe Japanese investors are shunning Australian assets for local ones. Reserve Bank governor Glenn Stevens has gone an interest-rate cut too far for Mrs Watanabe, as Japan's households look closer to home for returns. Aussie uridashi bond sales slumped 71 per cent to $1.8 billion this year, even as $9.4 billion in such debt matures in 2013, data compiled by Bloomberg show. What is becoming clear is that Japan is falling out of love with new buying of Australian dollar assets. The currency accounted for 10 per cent of bonds offered to Japanese individuals this year, compared with 64 per cent for yen-denominated offerings and a total of 28 per cent since 2006. Japanese investors cut Aussie debt holdings by a record 1.7 trillion yen ($16 billion) in the five months through March, Ministry of Finance data show. Bond fund manager Pimco said Tuesday Mr Stevens is likely to lower the RBA's benchmark interest rate again after cutting it on May 7 to a record 2.75 per cent. The yield premium benchmark Australian bonds offer over Japan's touched a half-year low this month. ""What is becoming clear is that Japan is falling out of love with new buying of Australian dollar assets,"" said Nomura interest-rate strategist Martin Whetton. Australia's 10-year yield was 3.47 per cent Tuesday. The premium over similar-dated US notes has shrunk 14 basis points this month to 128 basis points and touched 116 on May 28, the narrowest gap since November 2008. The spread to equivalent Japanese government bonds fell to 237 basis points on May 17, the least since November 19. The RBA probably will be forced to lower rates again as a record mining boom ends, China growth slows and the government curbs spending to rein in deficits, according to Pimco, which manages the world's biggest bond fund. ""To stimulate some of the domestic growth candidates like non-mining business investment, household consumption and housing construction, we believe the RBA will need to provide meaningfully easy policy rates,"" Adam Bowe and Robert Mead, Sydney-based portfolio managers for Pimco, wrote in a report. The Aussie dropped to 95.28 US cents, the weakest since October 2011, before recovering overnight to trade at 96.3 US cents this morning. Yen-denominated uridashi issuance since 2006 has climbed to $US79.4 billion, overtaking the $US76.7 billion of Aussie debt, data compiled by Bloomberg show. Uridashi are internationally traded bonds issued for sale to individual investors in Japan. Uridashi sales this year totalled $US17.6 billion across 13 currencies, the data show. Toyota "s Australian finance unit led Aussie-denominated sales with a $US219 million offering on January 16 of 3.32 per cent securities. Aussie-dollar uridashi issuance amounted to $US6.1 billion last year, or 14 per cent of the total. Issuance in the currency peaked at more than $US11 billion in 2010, when it was 28 per cent of offerings, according to Bloomberg-compiled figures. In contrast, the proportion of yen-denominated uridashi notes climbed to 55 per cent in 2012 from 31 per cent two years earlier. ""As a typical high-yielding currency, the Australian dollar had been quite popular among individual investors,"" said Toru Suehiro, a Tokyo-based market economist at Mizuho Securities. ""Now, its popularity is falling in relative terms due to monetary easing by the RBA.""