Rising Bond Yields Curb Bets Against Treasuries and JPY

The global bond market is experiencing rising yields, fueled by higher crude oil prices and anticipated policy rate increases from major central banks. This trend has pushed 30-year US Treasury yields back to pre-buyback levels after a brief dip following the August 19 announcement of unscheduled buybacks by the US Department of the Treasury.

USD/JPY has largely retraced its post-intervention slump, which occurred on July 31 as part of a joint intervention effort between the US and Japan. This reversal is attributed to signals effectively capping longer-term yields and USD/JPY, raising the cost of betting against Treasuries or the Japanese Yen.

Treasury Secretary Scott Bessent emphasized that these actions were meant to signal market fundamentals, rather than dictate prices. His statement suggests a shift in policy focus towards ensuring market participants understand the importance of fundamentals over market-driven price movements.