US-Japan Joint Intervention Fails to Calm Japan's Bond Market

The U.S. and Japan have jointly intervened in the foreign exchange market for the first time in 28 years, buying yen to stabilize its value.

This move is aimed at addressing excessive volatility in the Korean won, according to U.S. Treasury Secretary Scott Bessant.

Bessant noted that if the yen weakens significantly, other currencies will follow suit, and added that 'the stable yen value is very important not only for the United States but also for the entire Asian region.'

However, the Japanese bond market showed a lukewarm response to this joint intervention.

The 10-year government bond bid conducted by Japan's Ministry of Finance on the same day was the slowest in over a year, with the bid rate at 2.56 times, the lowest since May last year.

This sluggish bid is attributed to expectations that the Bank of Japan will raise interest rates sooner rather than later, as reflected in the OIS market, which now shows a 47% chance of a September key interest rate hike, nearly double from about 25 percent before last month's financial policy-making meeting.