Beta Ledger

#yenbreaks155nearingyearhigh 🚨 JAPAN’S YEN INTERVENTION IS BECOMING A BIG RISK FOR U.S. BONDS. Japan spent nearly $100 billion buying yen after it fell close to a 40 year low of 164 per dollar. To fund this intervention, it possibly sold over 6% of its foreign reserves worth nearly $1.2 Trillion. This matters because Japan is America’s largest foreign bondholder. Nearly 70% of Japan’s reserves are estimated to be invested in US Treasury bonds. If Japan keeps selling, bond prices could fall and yields could rise, making borrowing even more expensive across the U.S. The pressure is already visible. The 30-year yield recently touched 5.34%, its highest since 2007, while the 10-year reached 4.81%. This could not have come at a worse time. Investors are already demanding higher returns because of inflation, rising oil and America's growing fiscal deficit. The Treasury is trying to calm the market by doubling its long term bond buybacks to at least 4 billion per operation. The yen has now recovered to around 155 per dollar. But if it weakens again, Japan may be forced to sell even more. Japan is trying to protect its currency, but continued intervention could shift that pressure directly into the U.S. bond market. $SOPH $AKE $IOST