The US Treasury conducted its first coordinated yen intervention since 2011 between August 2-3, 2026, purchasing between $5 billion and $10 billion in yen while simultaneously selling euros to prop up the Japanese currency. The yen had weakened to approximately 162.80 per dollar before recovering to around 157.80 following the intervention. This operation reflects growing concerns about contagion between Japanese bond markets and US Treasury yields, as Japan has been selling Treasuries while the Bank of Japan raised its benchmark rate to 1%, the highest level in 31 years. Market analysts forecast a near-certain additional rate hike in September 2026, which could trigger further Treasury selling and carry trade unwinds.
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