--- title: "Did Japan Sell US Treasuries to Defend the Yen?" type: "News" locale: "en" url: "https://longbridge.com/en/news/285786882.md" description: "Federal Reserve custody data shows that as of the week ending May 6, the balance of US Treasuries held in custody for foreign official accounts decreased by $8.7 billion to $2.73 trillion. Furthermore, since late April, the USD/JPY exchange rate has decoupled from the trend of the 10-Year Treasury Yield, coinciding with the timing of Japan's suspected intervention in the foreign exchange market. As the largest foreign holder of US Treasuries, continued selling by Japan would push up Treasury yields" datetime: "2026-05-09T01:01:49.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285786882.md) - [en](https://longbridge.com/en/news/285786882.md) - [zh-HK](https://longbridge.com/zh-HK/news/285786882.md) --- # Did Japan Sell US Treasuries to Defend the Yen? Federal Reserve custody data indicates that during the period when Japan was suspected of intervening in the foreign exchange market, its holdings of US Treasuries recorded their first decline in a month, sparking market debate over whether Japan liquidated US Treasuries to raise funds to support the yen. **For the week ending May 6, Federal Reserve data showed that the balance of US Treasuries held in custody for foreign official and international accounts fell by $8.7 billion to $2.73 trillion.** **Moreover, since late April, the USD/JPY exchange rate has decoupled from the trend of the 10-Year Treasury Yield.** Bloomberg estimates that during the same period, Japan's Ministry of Finance spent approximately $54.7 billion to buy yen. Rodrigo Catril, senior FX strategist at Bank of Australia in Sydney, stated: > The changes in custody accounts appear to align with events where the Japanese Ministry of Finance instructed the Bank of Japan to intervene. Yuxuan Tang of JPMorgan pointed out that the Bank of Japan allocated funds from its reserves, enabling Japanese authorities to "execute operations during US trading hours, when liquidity in the US Treasury market is most abundant, helping to minimize market disruption." He added that this is also why Japanese authorities prefer to use short-term US Treasuries when conducting such operations. As the largest foreign holder of US Treasuries, if Japan's Treasury holdings have indeed shrunk, it will exert further upward pressure on Treasury yields. ## Actual Selling Volume May Far Exceed Decline in Custody Accounts It is worth noting that the $8.7 billion decline shown in the custody account data may represent only a small fraction of the impact of this intervention on the supply and demand dynamics of the US Treasury market. Shusuke Yamada, FX and rates strategist at Bank of America in Tokyo, pointed out in a research report that, **looking at historical intervention cases, the cash portion of Japan's foreign exchange reserves typically does not show a significant decline.** He stated: > Assuming the situation is similar this time, this implies that the supply and demand conditions in the relevant bond market—generally considered to be the US Treasury market—will deteriorate by approximately $70 billion. This estimated scale far exceeds the decline reflected in the Federal Reserve's custody accounts. **This potential bond-selling activity by Japan comes at a time when the US Treasury market is already under pressure.** Rising oil prices and market concerns that a potential war involving Iran could exacerbate the US fiscal deficit have continued to push up Treasury yields. **Rodrigo Catril pointed out that historical experience suggests that FX interventions are often sporadic, but "if this becomes the norm, it could pose a substantial problem for the US Treasury market."** Against this backdrop, US Treasury Secretary Bessent is reportedly set to visit Japan soon, where he is expected to meet with Japanese Prime Minister Sanae Takaichi, the Finance Minister, and Bank of Japan Governor Kazuo Ueda. ### Related Stocks - [AGG.US](https://longbridge.com/en/quote/AGG.US.md) - [YCS.US](https://longbridge.com/en/quote/YCS.US.md) - [TLT.US](https://longbridge.com/en/quote/TLT.US.md) - [159651.CN](https://longbridge.com/en/quote/159651.CN.md) - [511010.CN](https://longbridge.com/en/quote/511010.CN.md) - [511090.CN](https://longbridge.com/en/quote/511090.CN.md) - [BIL.US](https://longbridge.com/en/quote/BIL.US.md) - [IEF.US](https://longbridge.com/en/quote/IEF.US.md) - [BND.US](https://longbridge.com/en/quote/BND.US.md) - [GOVT.US](https://longbridge.com/en/quote/GOVT.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) ## Related News & Research - [Barclays warns yen recovery likely temporary despite Tokyo's $35bn intervention](https://longbridge.com/en/news/285009866.md) - [The Bank of Japan is back in the yen market](https://longbridge.com/en/news/285521818.md) - [TLT ETF stock forecast as Peter Schiff warns on the US 30-Year Bond yields](https://longbridge.com/en/news/285213290.md) - [TREASURIES-US yields drop as oil plunges on hopes for end to Iran war](https://longbridge.com/en/news/285399170.md) - [US Treasury keeps auction sizes steady; dealers expect change in early 2027](https://longbridge.com/en/news/285400093.md)