Japan's $74 Billion Yen Intervention Sells Treasuries, Pushing Up US Yields
Updated
Updated · robinjbrooks.substack.com · Jun 2
Japan's $74 Billion Yen Intervention Sells Treasuries, Pushing Up US Yields
3 articles · Updated · robinjbrooks.substack.com · Jun 2
Summary
$74 billion of Japan's May yen support likely added to upward pressure on US Treasury yields, as Tokyo had to raise dollars by selling reserve assets.
US Treasuries are the main pool of liquid reserves for such intervention, and past yen-defense episodes have coincided with Japanese Treasury sales; May data from the US Treasury have not yet been published.
The intervention's market impact was limited: the yen slid back to pre-intervention levels within weeks, underscoring how Bank of Japan bond buying to cap domestic yields keeps weakening the currency.
That leaves Japan's finance ministry and central bank working at cross-purposes, with the spillover hitting global bond markets already strained by Iran war risks and inflation worries.