US Treasury Yield Surge Undermines Yen Intervention Efforts
The US 10-year Treasury yield has surged to its highest level in over a year, undermining efforts by US Treasury Secretary Scott Bessent to prop up the Japanese yen. On July 30, 2026, Bessent participated in a coordinated yen-buying intervention with Japan, but since then, yields have risen significantly.
The yield has now surpassed its 52-week high of 4.748%, reaching 4.688% on August 20, 2026. This is a stark contrast to the levels when Bessent joined the intervention, and it's putting pressure on the yen. The USD/JPY exchange rate has dropped to around 158.62, just 158 pips from the trigger level of 160.
Bank of America has noted that bearish sentiment for the yen remains strong due to fiscal risks, and they predict a year-end USD/JPY forecast of 152. This implies significant appreciation is still needed for the yen, but the rising yields make it a challenging climb.