USD/JPY Rises as US Treasury Yields Surge Above 5%

The USD/JPY exchange rate is on the rise as US Treasury yields climb above 5% for the first time since 2007, driven by rising oil prices and expectations of tighter monetary policy. The dollar's gain has also pushed the yen back after it had gained around 4% this month on expectations that the Bank of Japan would raise rates faster.

The market is increasingly convinced that the Federal Reserve will hike interest rates by 25 basis points to 3.75-4%, with a 53% chance of another increase at the October meeting. This has led to a stronger US dollar, which in turn has pushed the yen back down.

In contrast, the DAX is falling due to rising oil prices and bond yields, as well as caution ahead of major central bank meetings this week. The 10-year U.S. Treasury yield has risen to its highest level since 2007, while the German Bund yield has reached a 15-year high.