KEY TAKEAWAYS
- US Treasury Secretary Scott Bessent’s warnings about speculating against the yen appear to have reversed declines in the yen and long-term Japanese government bond yields for the near term.
- Nevertheless, this rhetorical strategy appears to be more a short-term time buying exercise for both the US and Japan than a structural realignment.
- The impact of the Takaichi government’s commitment to fiscal expansionism, along with other factors that have weakened the yen, will reassert themselves eventually.