Bessent Pressures BOJ on Yen and Bond Market Moves, Raising Expectations for Tighter Policy

US Treasury Secretary Scott Bessent has increased pressure on the Bank of Japan (BOJ) to tighten monetary policy, raising market expectations for a significant move. In recent months, Bessent has intervened in both foreign exchange and bond markets, including coordinating with Japan's Ministry of Finance in early August to purchase yen and strengthen the currency against the US dollar.

The Treasury also announced plans on September 9 to repurchase up to $6 billion of longer-dated US Treasury bonds, triple the usual amount, aiming to curb rising Treasury yields. Bessent highlighted his market insight during a speech at Southern Methodist University in Texas, stating, 'I am the house now. So when we intervene with the Japanese yen, I have pretty good insight what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do. Bet against me if you want.'

The 10-year US Treasury note yield reached nearly 4.85%, while the 30-year bond yield exceeded 5.30%, driven by mounting US debt, geopolitical tensions such as the Iran war, and inflation expectations. These higher yields increase borrowing costs and government debt interest payments amid a nearly $1.8 trillion fiscal deficit.