US and Japan Intervene to Prop Up Yen

The US and Japan have jointly intervened to prop up the yen, leading to a brief drop in the USD/JPY exchange rate from above 163 to around 155.

This intervention has significant implications for US equities, as many investors had borrowed low-yielding yen to invest in U.S. stocks and Treasuries. With the yen now strengthened, these loans have become more expensive to repay, prompting some investors to sell part of their equity holdings.

The increased cost of repaying these loans is particularly affecting highly valued tech stocks, which are often hit first.