Precious metals are once again stealing the spotlight with silver surging above the $90 mark. However, there are still other key things taking place across markets too. With the rise in USD/JPY back above 159.00 overnight, the selloff in the Japanese yen currency and bond market continues to intensify.
10-year Japanese government bond yields have now surged up to above 2.18%, its highest since February 1999.
10-year Japan government bond yields monthly chart (%)
The rout is extending for a third straight month now, coinciding with Sanae Takaichi’s undertaking as prime minister. It’s very much a case of fiscal risks seeping in, as evident by the selloff in the currency as well. And market players are pricing in a higher premium in that regard in making up for the fact that the fiscal considerations are also accompanied by the government locking horns with the Bank of Japan (BOJ) on monetary policy setting.
BOJ governor Ueda sneaked in a comment earlier here in making sure that markets are still aware of their intentions to stick to their guns. That despite the constant political pressure by Tokyo officials in wanting the central bank to shelve rate hikes for the time being.
30-year yields in Japan have also risen to above 3.51% today, the highest on record. And amid the scuffle depicted above, the Japanese yen is also failing to find comfort as it already loses its preferred safe haven status and shelter for investors. USD/JPY is trading up 0.1% to 159.25 currently with watchful eyes on a push towards the key 160.00 level next.
It feels like it is only a matter of time before the ministry of finance intervenes in the market. However, the question remains what exactly is their appetite to keep doing so when the fundamentals are not changing? It’s a tough ask.
