U.S. 10-year Treasury yields climbed to 4.688% on Thursday, eroding the impact of Treasury Secretary Scott Bessent’s yen-buying intervention with Japan on July 30—the first such coordinated action since 1998.
The 10-year yield rose 0.75% on the session and 1.96% over the past month, approaching a 52-week high of 4.748%. The 30-year yield hit its highest level since 2007 before easing to 5.19% following the Treasury’s announcement of doubled buyback operations for long-dated paper. The 5-year yield rose to 4.394%, while the 3-month yield held steady at 3.797%.
Japan’s intervention, aimed at stabilizing the yen near 164 per dollar, has seen limited traction. The currency has since weakened to 158.62, leaving it 158 pips above Bank of America’s estimated re-intervention trigger at 160.00. BofA forecasts the yen could weaken further to 152 by year-end, citing persistent fiscal risks.
The Treasury’s decision to double buyback operations to at least $4 billion per session for 10-to-30-year maturities, effective August 19, has done little to curb the rise in long-dated yields. J.P. Morgan characterized the buyback size as "negligible in a $32.2 trillion market," underscoring the limited scope of the measure.
Market pricing indicates a 76% probability of a Bank of Japan rate hike in September, up from 24% on July 30, as inflation pressures persist. The broader macro backdrop includes U.S. debt exceeding $40 trillion and Brent crude above $91 per barrel amid disruptions in the Strait of Hormuz.
Analysts suggest future yen interventions may require larger-scale operations, potentially involving the Federal Reserve’s SOMA account, to achieve meaningful impact.
