USD/JPY Tumbles Below 153 Amid Warning Against Yen Intervention
The US Treasury Secretary's warning against testing Japanese Yen intervention has led to a decline in USD/JPY below 153. However, this move is seen as temporary, and the market awaits a sustained response from the Bank of Japan through a broader tightening cycle.
Fitch Ratings suggests that rising JGB yields are encouraging investors to sell low-coupon bonds and reinvest in higher-coupon paper, boosting future coupon income and policyholder dividends. The ratings agency also expects policy rates to rise faster than markets predict in 2026-2027, further supporting the yen and JGB demand.
The recent data showing Japanese selling of US Treasurys has had little immediate market impact but underscores the risks to U.S. paper and the importance of JPY stability.