JPY: Fiscal worries ease with stronger JGBs – MUFG
MUFG’s Head of Research Derek Halpenny observes a risk-off tone with lower US Treasury yields and weaker equities, while the Japanese Yen leads G10 FX.

MUFG’s Head of Research Derek Halpenny observes a risk-off tone with lower US Treasury yields and weaker equities, while the Japanese Yen leads G10 FX. The Yen is supported by a strong rally in JGBs and a successful 5-year auction, alongside reports that Prime Minister Takaichi will outline measures to reassure investors on fiscal management, helping reduce Yen-related fiscal risk premia.

Safe-haven bid as fiscal risk recedes

"The yen is the top performing G10 currency and gold and silver prices are also lower."

"The yen may have benefitted by the very strong rally in JGBs that further points to easing investor concerns over PM Takaichi’s approach to fiscal policy going forward."

"There was also a successful 5-year JGB auction with the bid-to-cover coming in at 3.1, down from a 12mth average of 3.48."

"The Nikkei today reported details of a speech to be given by PM Takaichi that contains steps to ease investor concerns over fiscal management."

"Yen risks related to fiscal risks are receding notably."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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