US and Japan Intervene to Support Yen at 40-Year Lows

Japan and the US have confirmed their first joint intervention since 2011 to prop up the yen, which had fallen to recent 40-year lows. The Bank of Japan delayed an interest rate rise last week due to a recent earthquake in the country, and the two governments may be concerned about how this decision could impact the yen.

The US is expected to spend between $5 billion and $10 billion on supporting the yen, with Japan selling almost $60 billion to support the currency. The intervention has arrested a slide that took the yen to 40-year lows last week, but it's unclear if this action will be successful in the long term.

The move has sparked concerns about US bond yields, as investors assume that Japan may liquidate Treasuries to raise dollars to sell. However, Scott Bessent noted that a Fed repo facility using Japan's bond holdings as collateral was activated, which could mitigate this risk.