00:00Japanese bonds falling on news that the government is supportive of a near-term rate hike from the
00:05BOJ. Analysts are noting a negative feedback loop between JGBs and the yen as the currency
00:11hovers within striking distance of the 160 level against the dollar. Bloomberg's Anya Andrianova
00:16joins us now for more. Anya, good to see you. So talk to us a little bit about how we're
00:22supposed
00:22to interpret the moves in dollar-yen because we already saw an intervention and yet we have seen
00:27some weakening in the yen. So did it not stick? Did it not work? Yes, the context of intervention is
00:33ruling here. They intervened into the market and it supported the yen but now we're almost half of
00:41way back to where it was before the intervention. So it did work, it bought time, it's a band-aid
00:47but what they really need is to hike rates and that's the promise that we saw this night for us
00:53night for them during the day. So if they do raise rate in September and maybe give a hawkish signal
00:59for further rates, so then that would support the currency. There is a delicate balance there
01:05that it would affect downward pressure on their bonds and obviously their yields will rise.
01:12And as there is a saying, when Japanese government bonds sneeze, the rest of the bond market catches a
01:17cold. So if their yields go up, then the rest of the world also goes up. So then they need
01:24to rise
01:24rates but maybe not too much, not to hurt their bond market. So they have to choose yen or their
01:31bond market. Okay, so what about the U.S. interest? Because as you've been reporting, the U.S. also was
01:38part of that intervention and that's quite rare. What were the motivations behind it and what does it
01:42mean for if the U.S. yields are going to catch a cold? It's quite rare when one sovereign nation
01:49is
01:49helping another one. So at this time, U.S. is worrying about U.S. and treasury yields. So them
01:58intervening, they prevented Japan to selling more of U.S. treasuries. It would be horrible if the biggest
02:05treasury holder, Japan, would start selling that would bring yields up here. So Scott Besson is
02:15worried about U.S. yields. That's why he's offering other facilities and talking, giving this verbal
02:21intervention that we'll do more, we'll do whatever it takes to help Japan. And the talk helps for some
02:28time, intervention helped for some time. The next step, it's in the hands of the Bank of Japan.
02:33All right.
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