Currencyshares JPY Trust

The U.S. 20-year Treasury auction ended poorly, with the 20-year Treasury yield breaking 5% and the 10-year Treasury yield surpassing 4.5%, advancing to 4.6%. The outcome aligns with Dolphin Research's analysis in the weekly strategy report: once the 10-year Treasury yield exceeds 4.5% and continues to rise, U.S. stocks follow with a correction. Regarding the surge in Treasury yields, Dolphin Research also noted in the report that while Trump claims to be a fiscal hawk, his tax cuts ultimately result in significant deficit policies.This means the deficit issues from the pandemic-era stimulus remain unresolved, and the federal government is adding more debt. The lack of market confidence naturally led to lower auction prices for U.S. Treasuries. Meanwhile, strange developments are occurring with Japanese bonds: Japan was the largest holder of U.S. Treasuries, but now Japan and the U.S. are negotiating, with the U.S. pushing for yen appreciation. From a trading perspective, yen appreciation against the dollar would expose Japanese private institutions holding U.S. Treasuries to exchange rate risks. Japanese insurers, similar to those in Taiwan, previously did not hedge against currency risks during the dual rise of the dollar and dollar-denominated assets. Thus, the optimal move during yen appreciation is to repatriate funds: sell U.S. Treasuries and buy Japanese bonds.However, the latest news indicates the negotiations failed, meaning trades based on expected agreements must now be unwound—buying U.S. Treasuries and selling yen. The result is a yen correction and rising Japanese bond yields.$VG Long-Term(BLV.US), $ProShares Shrt QQQ(PSQ.US), $SPDR Gold Shares(GLD.US), $Currencyshares JPY Trust(FXY.US), $Invesco Db Dlr Idx Bearish ETF(UDN.US)Additional note: Overseas creditors hold about 30% of U.S. Treasuries, with over 15% held by foreign private institutions rather than official entities. Japanese private institutions hold an even larger share, giving them greater pricing power in Treasury transactions than official entities.<figure class="image"></figure>The chart shows Japan was indeed selling U.S. Treasuries in April, but by the week of May 17, it had shifted to net buying. In other words, without Japanese buyers, Treasury yields might have risen even higher. If Japan and the U.S. eventually reach a trade agreement and the yen appreciates, Japanese buyers may further sell U.S. Treasuries.<figure class="image"></figure> The weakening trend of the dollar is certain in this process. If the U.S. continues large-scale Treasury financing under these conditions, it’s no surprise that investors are betting on the 10-year Treasury yield soaring to 5%.Reference: &#34;Big but Ugly&#34; = &#34;Big Deficit&#34;: Will U.S. Stocks Suffer Again Due to Treasuries? https://longportapp.cn/zh-CN/topics/29808412

“大而美”=“大赤字”，美股又要被美债连累了？ - LongPort

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Japan Finance Minister Saizuki: Will Take Appropriate Measures Against Forex Volatility

Japan's Finance Minister Katayama Says No Comment on FX Market Intervention

Yen falls 0.2% against the dollar to 159

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Global Market Stability Amid Focused Currency Movements and Tech Earnings

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JAPAN'S KATAYAMA SAYS G-7 NATIONS GRASP JAPAN'S FOREIGN EXCHANGE POSITION.

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JAPAN'S KATAYAMA SAYS G-7 NATIONS GRASP JAPAN'S FOREIGN EXCHANGE POSITION.

Japan's Finance Minister Mira Katayama is prepared to take decisive action on foreign exchange, while BOJ's Ueda notes that recent GDP data aligns with forecasts. They are monitoring upward price pressures and rising long-term interest rates. The USDJPY has dipped but remains above 158.64, with key downside targets at 158.529 and 158.60. A break below these levels could strengthen the bearish bias.

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Japan's Finance Katayam: Ready to take decisive action on forex

Bank of Japan Governor Kazuo Ueda stated that the central bank will implement appropriate monetary policies to achieve its inflation target. According to Jin10, Ueda emphasized the importance of aligning monetary policy with the goal of stabilizing inflation. The Bank of Japan remains committed to its strategy to ensure economic stability and growth.

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Bank of Japan Governor Kazuo Ueda on Monetary Policy

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Japan's ruling Liberal Democratic Party (LDP) has proposed a five-year plan for stablecoins and blockchain settlement, urging the Financial Services Agency to create a roadmap. The plan highlights the need for on-chain finance to protect the yen's sovereignty and warns of Japan's potential lag in global payment systems. It also seeks clearer regulations on payroll, tax payments, corporate funding, and cross-border transfers.

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Treasury Secretary Bessent stated that discussions at the G7 finance meeting were constructive and expressed confidence in Bank of Japan Gov. Ueda's monetary policy guidance. He noted that 'excess' volatility in the Forex market is undesirable, highlighting strong fundamentals in the Japanese economy. The USDJPY is expected to move lower, with key downside targets at 158.599 and 158.478.

US Treasury Secretary Bessent.  Excess FX volatility is undesirable.

The USD/JPY has resumed its upward trend following Japan's intervention in late April, reclaiming the key 158.00 level. Despite this, the yen remains under pressure due to rising US yields and oil prices, raising concerns about the effectiveness of further interventions. The outlook suggests potential for the USD/JPY to exceed 160.00, with diminishing returns from interventions. A coordinated effort with the US could enhance credibility, but currently, the market remains skeptical about the effectiveness of unilateral actions.

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USD/JPY outlook: Yen remains under pressure as oil and US yields press higher

The Bank of Japan (BOJ) may slow its bond tapering plans due to recent market turbulence, which has raised concerns among bond investors. While the BOJ is expected to raise interest rates in June, it might indicate a less aggressive approach to reducing its massive debt holdings, currently at 500 trillion yen. Analysts suggest options include pausing tapering or reducing monthly purchases, with a focus on stabilizing market conditions. The BOJ's decision will be influenced by feedback from bond investors and the overall economic environment.

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MORGAN STANLEY DEP SHS REPS 1/1000 7.125% PFD E

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MORGAN STANLEY 4.875 DEP SHS REP 1/1000 NCUM PFD SR L

MORGAN STANLEY 6.5%DEP SHS REPSTG 1/1000 NON CUM SER P

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Analysis:BOJ could temper its taper as bond wobbles rattle markets

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Japan's economy grew 2.1% in Q1, surpassing expectations and bolstering the case for Bank of Japan interest rate hikes. Strong private consumption and trade contributed to this growth, despite uncertainties from the Middle East conflict. Economists suggest the BOJ may raise rates as early as June or July, although inflation risks and consumer confidence remain concerns. The yen weakened slightly post-report, and the BOJ has adjusted its growth forecast down to 0.5% for the fiscal year, raising inflation expectations to 2.7%.

- Japan's economy experienced a strong growth rate of 2.1% in the first quarter, exceeding economists' expectations of 1.7%.  
- The positive data on private consumption and trade support the Bank of Japan's potential interest rate increase, despite uncertainties from conflicts in the Middle East.  
- However, concerns over declining consumer confidence and rising inflation may pressure future growth, with the central bank adjusting its forecasts accordingly.

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Japan’s faster economic growth offers window for BOJ rate hike

HSBC economists report that Japan's GDP growth is recovering, but risks are rising due to slowing global trade and a weaker yen. While the Bank of Japan's policy normalization continues, interest rate hikes may be on the horizon. Despite two consecutive quarters of growth, consumer confidence is declining, and inflation expectations are increasing. Strong exports are offset by potential tourism demand declines due to rising aviation fuel prices and Middle East conflicts.

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HSBC Economists Highlight Risks Amid Japan's Economic Recovery

Japan is prepared to intervene against excessive foreign exchange volatility while avoiding impacts on U.S. Treasury yields. Finance Minister Satsuki Katayama stated that Japan may have spent nearly 10 trillion yen ($63 billion) on yen-buying interventions since April 30. The yen has fluctuated significantly, nearing the 160 mark, which is critical for intervention. Discussions at the G7 meeting included the causes of volatility, such as crude oil prices and speculative behavior, but no intervention was confirmed.

- Japan is ready to act against excessive foreign exchange volatility while ensuring interventions do not increase U.S. Treasury yields, officials stated.  
- Finance Minister Shunichi Suzuki indicated that fluctuations in oil prices are affecting exchange rates and government bond yields, with Japan potentially spending nearly 10 trillion yen since April 30 on yen-buying interventions.  
- As the yen approaches the intervention threshold of 160 per dollar, discussions at the G7 meeting included volatility caused by geopolitical developments, while maintaining liquidity in reserves to minimize market impact is a priority.

Japan ready to act on FX volatility, mindful of US bond market impact