Home›Bonds & Rates›Economy›Japanese yen support efforts coincide with Treasuries…

Japanese yen support efforts coincide with Treasuries selloff

Japan confirmed it was selling foreign bonds to support the yen, and the U.S. Treasury warned dealers it could intervene to support yen trades.

Reported · Written up by our desk · Economy

Friday’s Treasury selloff did not fit the usual drivers, with Mortgage News Daily pointing to currency intervention pressures as the likely catalyst. The outlet said much of the selling appeared tied to Japanese efforts to support the yen, including Japan confirming it was selling foreign bonds.

Mortgage News Daily added that the U.S. Treasury also appeared to play a role, warning dealers that it could make trades to support the yen. The outlet described uncertainty about what the warning meant beyond potential use of the Exchange Stabilization Fund for currency-related execution, but said the overall effect seemed to encourage U.S. accounts to sell Treasuries before other considerations.

The selloff context also included month-end positioning and the timing of the week ahead of the jobs report, with the outlet noting trading volume was fairly light relative to the size of the decline.

Mortgage News Daily said it may not be the final chapter in the story, given that similar episodes have occurred before.

More like this

Sources