Rabobank's RaboResearch discusses the Japanese Yen's recent performance, noting a reversal in 10-year yields and the potential for intervention amid rising inflation and trade deficits. The analysis highlights the precarious situation of Japan's economy and the implications for US Treasuries, suggesting that the country may need external support to address its financial challenges.

Yen intervention and economic outlook

"As the WSJ notes, 'Wall Street Is Fixated on a Possible Yen Intervention.' After all, Japanese CPI is 2.1%, 30-year yields are 3.66%, the BOJ can’t do too much because public debt is so high, the country has run five annual trade deficits in a row, removing its protective shield, and a weak JPY isn’t helping, just feeding inflation."

"Some see Japan needing a US bailout before these JGB problems flow back to US Treasuries… even as markets are wondering who is going to bail the US out."

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