The Japanese Yen fell to a 4-week low against the US Dollar, as the market continues to assess the impact of the US debt downgrade. For the first time since 1994, the credit rating agency Fitch downgraded the U.S. to AA+ from AAA on Tuesday. The US Department of Treasury then stated on Wednesday that …
The Japanese Yen fell to a 4-week low against the US Dollar, as the market continues to assess the impact of the US debt downgrade. For the first time since 1994, the credit rating agency Fitch downgraded the U.S. to AA+ from AAA on Tuesday. The US Department of Treasury then stated on Wednesday that it will attempt to issue US$ 103 billion in debt next week, up from US$ 96 billion the last time. Treasury rates are a few basis points higher over the curve, but especially near the tail.
Risk assets in general have been declining since then, APAC equities have followed suit today, with Japan leading the way lower. The Nikkei 225, TOPIX, and JPX-Nikkei 400 indices are all down more than 1%. The USD/JPY pair has risen beyond 143.50 today, but it is the growth-linked Aussie and Kiwi Dollars that have suffered the most in this latest risk-off rally.
To compound matters, Bank of Japan announced an unscheduled bond-buying programmed today, following the unscheduled action on Monday. The 10-year Japanese Government Bond (JGB) continues to trade near 0.65%, its highest level since 2014. Nonetheless, the spread between 10-year Treasuries and JGBs continues to favor the US Dollar.
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Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
