Japan On Possible Yen Intervention Watch

Summary

Anya Andrianova discusses Japan's yen intervention and BOJ policy with Emily Graffeo. She argues the intervention only bought time and that a BOJ September rate hike with hawkish guidance would support the yen, but would pressure JGBs and could lift global bond yields. She also explains that US involvement in the intervention was driven by concern that Japanese selling of Treasuries would push US yields higher.

• Japanese yen remains near 160 versus the dollar despite intervention.
• Government is said to support a near-term BOJ rate hike.
• A BOJ rate hike is seen as needed to support the yen but risks JGBs.
• Higher JGB yields could spill over to global bond yields.
• The US intervened partly to prevent Japan from selling Treasuries.
• Scott Bessent is worried about US Treasury yields.
• Intervention and verbal support only buy time; next step is with the BOJ.
• BOJ faces a trade-off between the yen and its bond market.