The yen has weakened back to 158.93 against the dollar, erasing a quarter of the gains from Japan's nearly $88 billion intervention just ten days ago. The Ministry of Finance bought yen on July 30 and 31 through the Bank of Japan, spending about ¥8.45 trillion on the first day and roughly $34 billion on the second, with the United States joining in its first coordinated yen purchase since 1998 by selling euros for yen through the New York Fed. Goldman Sachs notes that Japanese investors continued buying foreign bonds at a strong pace in July, keeping capital outflows high, and argues a BOJ rate hike next month would help the yen more than another rescue. Japan's 10-year government bond yield hit 2.807% on Monday, near multi-year highs, raising concerns because government debt exceeds 200% of GDP and higher rates would increase the state's interest bill and deepen unrealized losses for insurers. Bitcoin, which slid to near $63,000 when the joint rescue first hit, traded at $64,038 as traders watch for a possible September BOJ hike that could trigger another carry trade unwind.
Yields near multi-year highs due to intervention fading and BOJ hike expectations.
