Isfar Munir, head of interest rate research at PNC, said in the report that if Japan's Ministry of Finance needs to finance foreign exchange market intervention in the future, it is unlikely that even medium-term US Treasury bonds will be sold, so the impact on long-term US bond yields is expected to be limited. Although 30-year US Treasury bonds were simultaneously sold off when there were signs of yen intervention last week, the negative value of the 30-year swap spread narrowed during the same period. If the trend of long-term US bonds reflects intervention in the foreign exchange market, the negative value of the swap spread should widen further. If subsequent intervention does have an impact on longer-term yields, it may be transmitted through some kind of “market perception channel”. However, this may require the market to interpret the intervention as a sign of a decline in demand for US bonds over a longer period of time.

Isfar Munir, head of interest rate research at PNC, said in the report that if Japan's Ministry of Finance needs to finance foreign exchange market intervention in the future, it is unlikely that even medium-term US Treasury bonds will be sold, so the impact on long-term US bond yields is expected to be limited. Although 30-year US Treasury bonds were simultaneously sold off when there were signs of yen intervention last week, the negative value of the 30-year swap spread narrowed during the same period. If the trend of long-term US bonds reflects intervention in the foreign exchange market, the negative value of the swap spread should widen further. If subsequent intervention does have an impact on longer-term yields, it may be transmitted through some kind of “market perception channel”. However, this may require the market to interpret the intervention as a sign of a decline in demand for US bonds over a longer period of time.