Treasury Secretary Scott Bessent said he expects Tokyo to move toward a stronger yen, hours before Japan’s 10-year government bond yield touched above 3%, its highest level since September 1996, raising the probability that the Bank of Japan will raise rates in September.
Bessent Hints At a September Rate Hike
“As I’ve said, I have information that the market doesn’t have,” Bessent told CNBC’s Sara Eisen on Monday at the G20 finance ministers’ meeting in Asheville, North Carolina. “And it’s my belief that the Japanese government and that the BOJ will do the things that will lead to a stronger yen.”
Asked directly if that meant a rate hike, Bessent said, “I think the market’s pricing that in now.”
Yields Climbed on Inflation Fears and Renewed Iran Tensions
Japan’s benchmark yield hit 3.003%, touching a three-decade high, as renewed U.S.-Iran hostilities pushed oil prices higher and stoked fears of tighter global monetary policy.
Traders on Polymarket now put an 89% chance on the BOJ raising rates by 25 basis points in September, with just 12% pricing in no change.
Coordinated Yen Intervention
The U.S. and Japan have already intervened jointly once this year, with the New York Fed executing a coordinated yen purchase on July 31 after the currency fell past 163 to the dollar, its weakest level in nearly four decades.
Japan reportedly spent as much as $36.58 billion in that operation, dwarfing the roughly $5 billion to $10 billion the U.S. contributed.
The yen traded at 159.96 per dollar at the time of writing.
America’s Yields are Climbing Too
The U.S. 10-year Treasury yield touched 4.78% Monday, its highest since 2007, as global bond markets react to the same inflation and fiscal pressures.
The 30-year yield hit 5.32% earlier in August, its highest in 19 years, prompting the Treasury to double its long-dated bond buybacks to $4 billion per operation to cool borrowing costs.
Odds of a September U.S. Federal Reserve rate hike jumped as high as 66.4% following Fed Chair Kevin Warsh‘s hawkish Jackson Hole speech on Friday, according to the CME FedWatch tool.
The State Street SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.30% lower on Monday at $767.05 and fell 0.08% in early pre-market trading on Tuesday, while Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) closed 0.05% higher at $716.76, but fell 0.21% in pre-market trading.
Benzinga edge rankings indicate the State Street ETF has a Momentum score in the 71st percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image: Josh Morgan via Imagn Images
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