Treasury yields are responding to Japan\u2019s latest currency intervention.\u00a0<\/span>(Spencer Platt\/Getty Images)<\/span><\/p>\n<\/div>\n<\/div>\n Japan\u2019s latest move to stabilize the yen suggests an intervention of nearly $53 billion and has triggered a spike in Treasury yields.<\/p>\n<\/div>\n<\/li>\n On Friday, the 10-year Treasury yield rose more than nine basis points to 4.735%, reaching its highest level since 2023.<\/p>\n<\/div>\n<\/li>\n Further yen interventions could put upward pressure on yields because Japan sells U.S. Treasuries to fund the currency purchases.<\/p>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n Japan\u2019s latest move to stabilize the yen is having a big and potentially troubling impact on Treasury markets.<\/p>\n The 3.3% surge in the yen<\/a><\/span><\/span>, when priced against the dollar, suggests an intervention that could hit nearly $53 billion. Japan is trying to balance its rising debt costs with its terminally weaker currency; the Ministry of Finance hasn\u2019t commented publicly.<\/p>\n The\u00a0yen<\/a><\/span>\u00a0was last marked at 159.5 against the greenback, down 2.7% from the multidecade highs it reached earlier this week.<\/p>\n And the move triggered a spike in Treasury bond yields. On Friday, the\u00a010-year<\/a><\/span>\u00a0rose more than 9 basis points to 4.735%, the highest level since 2023.<\/p>\n \u201cJapan will be selling Treasuries to get its hands on the dollars, that it then sells, to buy its own currency in the vain hope that this will stop the Yen from falling,\u201d said Robin Brooks, senior fellow in economic studies at the Brookings Institution.<\/p>\n Japan\u2019s intervention\u00a0came during a long slump for the yen\u2014now<\/a><\/span><\/span>\u00a0at a 40-plus-year low against the dollar. And the move flies in the face of the\u00a0Bank of Japan<\/a><\/span>, which has kept interest rates at\u00a0their highest levels since 1995<\/a><\/span><\/span>\u00a0but hinted at hikes to hold down inflation and energy costs in the world\u2019s fourth-largest economy.<\/p>\n \u201cAt a time when there\u2019s already lots of stress in government bond markets globally, Japan\u2019s debt dysfunction is spilling over into global markets in the form of higher Treasury yields,\u201d he added.<\/p>\nKey Points<\/strong><\/h2>\n
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