Precious metals have returned to the spotlight, with silver surging above the $90 mark. However, significant developments are also occurring in the currency and bond markets, particularly involving the Japanese yen.

The USD/JPY pair climbed back above 159.00 overnight as the selloff in the Japanese yen and government bond market intensifies. Ten-year Japanese government bond yields have surged beyond 2.18%, reaching highs not seen since February 1999. This marks the third consecutive month of fallout, coinciding with Sanae Takaichi’s tenure as prime minister.

The ongoing selloff reflects growing fiscal risks. Market participants are demanding higher risk premiums due to fiscal concerns compounded by tensions between the Japanese government and the Bank of Japan (BOJ) over monetary policy. While Tokyo officials pressure the BOJ to pause rate hikes, BOJ governor Ueda recently emphasised the central bank’s commitment to maintaining its current policy stance.

Meanwhile, 30-year Japanese government bond yields climbed above 3.51% today, marking an all-time high. Amid these developments, the Japanese yen continues to weaken, losing its appeal as a safe-haven currency. USD/JPY is currently trading up 0.1% at 159.25, with traders closely watching for a potential move towards the key 160.00 level.

There is increasing speculation about whether Japan’s Ministry of Finance will intervene in the currency market. However, with unchanged fundamental pressures, the government’s willingness or ability to sustain such interventions remains uncertain and challenging.

Original Source: Justin Low of investinglive.com