Tag: US Treasury

  • US 30-Year Bond Yield Reaches Highest Level Since 2004 Amid Sustained Selloff

    US 30-Year Bond Yield Reaches Highest Level Since 2004 Amid Sustained Selloff

    Overview

    The 30-year US Treasury yield climbed to 5.444% on Thursday, marking its highest level since 2004. The rise came as persistent selling pressure in global bond markets, combined with stronger-than-expected US economic data, renewed fears of inflation and further interest rate hikes by the Federal Reserve.

    The 10-year Treasury yield also rose, reaching 5.145%. Bond prices move inversely to yields, so the increase reflects continued weakness in Treasury prices.

    Strong US Data Fuels Rate Hike Bets

    The yield surge followed better-than-expected US economic figures. The S&P Global Purchasing Managers’ Index for services climbed to 58.7 in September from 56.5 in August, the highest level in nearly five years. The Manufacturing PMI also rose to 56.7, the highest in more than four years.

    According to market estimates, the Federal Reserve now has a 66% chance of raising interest rates in October, up from 53% earlier in the day. Just one month ago, the probability stood at less than 10%. The Fed increased rates during the previous week for the first time since 2023.

    Global Bond Markets Remain Under Pressure

    The pressure extends beyond US Treasuries. Bond markets worldwide have faced selling pressure for months due to higher energy prices, resilient economic growth, and concerns about elevated government debt. The US-Israeli war on Iran has pushed up energy prices, adding another source of inflationary pressure.

    Investors are closely watching Treasury auctions after a weak five-year note auction on Wednesday. The seven-year note auction later Thursday was expected to provide further clues about investor demand. The two-year US Treasury yield fell 1.8 basis points to 4.877%, while the gap between two- and 10-year yields stood at a positive 24.7 basis points.

    Jefferies chief US economist Thomas Simons noted that the long end of the Treasury market was ‘trading a bit better’ as investors assessed the latest moves.

  • Japan and US Stage Rare Joint Intervention to Stabilize Yen Amid Rising Volatility

    Japan and US Stage Rare Joint Intervention to Stabilize Yen Amid Rising Volatility

    Japan and the United States have carried out a rare coordinated currency intervention to support the yen and curb disorderly market movements. Tokyo also signaled readiness for further action as a weaker currency and higher oil prices pressure Japan’s economic outlook.

    Joint Action Targets Sharp Yen Swings

    Japan’s Ministry of Finance confirmed the operation on Monday after intervention took place on Friday, July 31. Officials said both countries acted to curb excessive volatility and disorderly movements in the yen. Japan bought yen during Friday’s operation in coordination with the US Treasury. The action followed months of pressure on the currency, which recently traded near four-decade lows against the dollar.

    The ministry linked the move to the Japan-US Finance Ministers’ Joint Statement issued in September 2025. That agreement allows intervention when exchange rates show excessive volatility or disorderly movement. It also calls for transparent reporting of currency operations.

    Finance Minister Satsuki Katayama said Tokyo would keep close contact with Washington. She added, “We will not hesitate to carry out further coordinated interventions.” The United States also signaled support for further action. Treasury Secretary Scott Bessent said Washington backed Japan’s measures and stood ready to join another operation. The coordinated action was the first involving both countries since 2011.

    Meanwhile, the yen strengthened after Japan confirmed the intervention. It moved above 155 per dollar before giving back part of the gain. Traders continued to watch for more official buying. Markets now remain alert to further policy signals from both governments.

    FIMA Facility Adds Another Funding Option

    Japan also plans to use the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility. The FIMA facility gives approved foreign monetary authorities access to short-term dollar funding. Under the program, authorities can temporarily exchange US Treasury securities for dollars, providing liquidity without forcing them to sell Treasury holdings directly in the open market.

    Japan’s ministry stated, “Japan plans to utilize the Federal Reserve’s FIMA Repo Facility in the future.” Tokyo can use the program to manage dollar needs during market stress. Additionally, the facility may support future intervention operations when authorities need dollar liquidity. However, access depends on the amount of eligible Treasury securities pledged as collateral. The ministry said it would maintain regular communication with the US Treasury and keep monitoring foreign exchange conditions to respond to disorderly moves.

    Weak Yen Adds Pressure on Japan’s Economy

    The intervention comes as Japan faces weaker growth and higher import costs. A soft yen raises the local cost of crude oil, food, and other imports. Japan recently cut its fiscal 2026 growth forecast to 0.9% from 1.3%, citing higher energy costs linked to Middle East tensions and pressure on household spending and company earnings.

    Moreover, the government lowered its private consumption forecast to 0.9% from 1.3% and reduced its capital spending growth estimate to 2.3% from 2.8%. Japan depends heavily on imported energy, so high oil prices and a weak currency can raise costs across transport, manufacturing, and household budgets.

    The Bank of Japan also faces close market attention. It kept its policy rate unchanged at 1% last week but left room for another increase. However, currency intervention and interest-rate policy serve different roles: the finance ministry manages exchange-rate operations, while the central bank sets monetary policy.