The report highlights building downside risks for the JPY as rising US 10-year yields and a hawkish Fed shift under new leadership (Kevin Warsh) strengthen the USD. Despite potential BoJ rate hikes, further currency intervention may be required if external yield pressures persist.
Key Takeaways
- 1.Surging US 10-year yields (+30bps) are undermining recent Japanese currency interventions, as the 2Y US-Japan yield spread correlation strengthens.
- 2.The Federal Reserve is shifting hawkishly as Kevin Warsh prepares to take over as Chair, with upcoming FOMC minutes likely to reveal significant dissent against rate cuts.
- 3.The Bank of Japan is under increasing pressure from the US to hike rates to support the yen, with Governor Ueda adopting a more hawkish tone ahead of the June meeting.
Table of Contents
- JPY: Rising US yields to force more intervention
- USD: FOMC minutes to reinforce yield momentum
- KEY RELEASES AND EVENTS
- CERTIFICATION
- LEGAL ENTITIES AND BRANCHES
- GENERAL DISCLAIMERS
- COUNTRY AND REGION SPECIFIC DISCLAIMERS
Document Preview
Access the Full Report
Get unlimited access to institutional research reports with a 14-day free trial.
Authors
Derek Halpenny
Securities
USDJPYDXY10-year UST bondEURUSDCrude Oil
Themes
Yield Spread CorrelationCentral Bank Policy DivergenceCentral Bank Leadership Transition
Regions
Asia PacificNorth AmericaEuropeJapanUnited StatesUnited Kingdom