During the G20 finance ministers' meeting on September 9, US Treasury Secretary Bessent issued a stern warning to yen bears, stating: "When we intervene in the yen exchange rate, I am fully informed. I have complete insight into the Bank of Japan's and policymakers' moves." This statement showcases his command over yen exchange rate dynamics. He further cautioned, "If you want to go against me, by all means try — I hold the information," sending a powerful signal of potential intervention to the market.
On July 31, the US and Japan conducted a joint intervention on USDJPY, with the market price falling to 155.21 in the following days, marking a multi-month low. According to third-party analysis, this operation likely utilized approximately 8.45 trillion yen (about $52.8 billion). While Japan's central bank intervened by selling US dollars to buy yen, US involvement possibly entailed selling euros to purchase yen, causing the less-traded EURJPY cross pair to decline sharply in tandem.
Bessent's strong signal toward yen intervention presents elevated risk for conservative capital, somewhat curbing total short positions on the yen. However, policy intervention typically only exerts influence in the short to medium term, while long-term directional trends remain anchored in Japan's macroeconomic fundamentals and US Federal Reserve monetary policy.
Where market focus should lie
Bond yield fluctuations form the core driving logic for currency markets. Over the past 24 hours, alongside Bessent's remarks, the 10-year US Treasury yield experienced intense volatility — first tumbling from 4.816% to 4.767%, then rebounding to a high of 4.815%, followed by further notable swings. These yield movements reflect shifts in market confidence and sentiment. The latest yield remains virtually unchanged from pre-speech peaks, indicating that while market participants respect the US-Japan joint intervention, mere rhetoric without substantive action fails to intimidate yen short sellers.
Japan's 10-year government bond yield dropped sharply at today's open, hitting a low of 2.877% during early European trading, with the latest reading at 2.883%. The decline in Japan's bond yields suggests lingering doubts among investors about the Bank of Japan's commitment to further rate hikes. According to reports, the central bank plans to raise interest rates to 1.25% at its September 17–18 meeting. Yet, this bullish development failed to push JGB yields higher, and Bessent's comments could not effectively suppress US Treasury yields. Whether USDJPY's downward trajectory can be sustained remains highly uncertain.
Assessing Japan's macro backdrop
Japan's quarterly GDP growth stands at 0.4% quarter-on-quarter and 0.7% year-on-year, both at relatively subdued levels. While some market participants are optimistic about Japan's economy based on rising inflation and price trends, aggregate output data reveals no clear signs of comprehensive recovery. Unemployment sits at 2.4%, the national inflation rate at 1.9%, and interest rates at 1%, with the trade balance in deficit territory. Japan's trade deficit is not persistent — some months record surpluses — yet such instability implies domestic demand has yet to reach robust levels.
With interest rates below inflation, the Bank of Japan retains room for further rate increases, while the yen itself continues to possess conditions for gradual internal depreciation. In summary, despite the US-Japan joint intervention and Treasury Secretary Bessent's aggressive rhetoric, any assessment of USDJPY's long-term path must rely on Federal Reserve monetary policy and Japan's economic recovery prospects. Market participants should avoid blindly betting on yen appreciation.
Risk disclosure and disclaimer: Markets carry risks, and investment requires caution. The content above represents the analyst's personal views only and does not constitute any operational advice. This report should not be treated as the sole reference source. Analyst opinions may change over time without prior notice.