# First US-Japan Joint Yen Intervention in 15 Years Sparks Advance

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 3 Aug 2026, 17 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/683a61b9-cf72-4f51-8db5-b49b002787af/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Business and finance news from the Asia-Pacific. The yen advanced sharply on Monday amid high alert in markets. This comes after Japan confirmed its first joint intervention with the US in currency markets in 15 years and warned that it was ready to act again, after the yen last week slid to a four-decade low. Japan’s Finance Ministry intervened in the market on Friday in coordination with the Treasury Department. US President Donald Trump earlier said the US joined the currency-market intervention as a sign of friendship with Japan, saying that he expects Washington to reap a financial benefit from helping the ally. Separately, US Treasury Secretary Scott Bessent said in a post on X that the US stepped in to help fight “disorderly” movements in the yen and is ready to keep helping Japan. Bloomberg's Paul Allen and Haidi-Stroud Watts spoke to Louise Loo, Head of Asia Economics at Oxford Economics. Amid US intervention with the yen in Japan, bond investors say the risk of a deeper Treasury rout is rising as Federal Reserve Chairman Kevin Warsh keeps investors in the dark about how officials will respond to the evolving economy. The Treasury market is signaling that Warsh's inflation-fighting credibility is eroding after he declined to outline how he plans to curb price pressures when policymakers left interest rates unchanged last week. The result is steeper borrowing costs for the government, homeowners and companies, with the rate on the 30-year Treasury at a 19-year high. Bloomberg's Paul Allen and Haidi-Stroud Watts spoke to Julia Wang, North Asia CIO for Nomura International Wealth Management. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
[0:08] Speaker 2: Welcome to the Daybreak Asia podcast. I'm Charlie Peal at
[0:11] Speaker 2: the Yen advanced sharply on Monday. This comes after Japan
[0:15] Speaker 2: confirmed its first joint intervention with the US and currency
[0:18] Speaker 2: markets in fifteen years and warned it is ready to
[0:22] Speaker 2: act again after the en last week slid to a
[0:25] Speaker 2: four decade low. Japan's Finance ministry says it intervened in
[0:30] Speaker 2: the market on Friday in coordination with the US Treasury Department.
[0:34] Speaker 2: President Trump earlier said the US joined the currency market
[0:37] Speaker 2: intervention as a sign of friendship with Japan, adding that
[0:41] Speaker 2: he expects Washington to repate financial benefit from helping the ally. Separately,
[0:47] Speaker 2: Treasury Secretary Scott Besson said in a post on x
[0:50] Speaker 2: that the US stepped in to help fight quote disorderly
[0:53] Speaker 2: movements in the yen and is ready to keep helping Japan.
[0:57] Speaker 2: And to get more on the story, we heard from
[0:59] Speaker 2: the head of Asia Economics at Oxford Economics, Louise lou
[1:03] Speaker 2: She spoke with Bloomberg's Paul Allen and Heidi Stroud Watts.
[1:08] Speaker 3: It's it's a lot of it's a lot of things
[1:10] Speaker 3: happening to get at the same time as Japan, right,
[1:13] Speaker 3: I think a lot of the weakness around the currency
[1:16] Speaker 3: has got to do with you know, structural underlying fundamentals,
[1:20] Speaker 3: in particular at its current stage, you know, the fiscal
[1:23] Speaker 3: poist from the government. So I think so long as
[1:27] Speaker 3: that stays unchanged, and so long as you know, the
[1:30] Speaker 3: fact remains unmoved in its in its interest rate, then
[1:35] Speaker 3: we should continue to see some of these currency weakness
[1:38] Speaker 3: coming from Japan. So you know, the intervention may work temporarily,
[1:42] Speaker 3: but to the extent that markets continue to think that
[1:44] Speaker 3: the Bank of Japan is behind a cuff, I think
[1:46] Speaker 3: that weakness will prevail.
[1:49] Speaker 4: Yeah, the Bank of Japan moving at utterly glacial speed
[1:52] Speaker 4: on tightening and showing no real urge to pick up
[1:54] Speaker 4: the pace either. Is the pressure starting to build? When
[1:57] Speaker 4: do you think we might see tightening?
[2:02] Speaker 3: Well, our base case is still that the Bank of
[2:05] Speaker 3: Japan would high grate in December, which feels like an
[2:07] Speaker 3: awfully long way away. But I think, you know, to
[2:11] Speaker 3: the extent that we have, for instance, higher oil prices
[2:14] Speaker 3: aggravating the terms of trade shock along with a weaker currency,
[2:17] Speaker 3: to the extent that we have that I think Marcus
[2:20] Speaker 3: may start to think that the economy has a real
[2:22] Speaker 3: risk of falling into tacfulation, and so you know, the
[2:26] Speaker 3: bets against the faster BOJ rate heights will go up.
[2:31] Speaker 3: The concern here is that, you know, faster rate heights
[2:33] Speaker 3: may support the yen temporarily, but it would be quite
[2:37] Speaker 3: negative for the economy that really hasn't been very strong
[2:40] Speaker 3: domestically and organically. So you know, the economy remains quite
[2:43] Speaker 3: structurally vulnerable to the kind of terms of trade shop
[2:46] Speaker 3: that could feed through quite quickly.
[2:50] Speaker 1: December feels like a long way away from beerj particularly
[2:53] Speaker 1: at a time when there's increased volatility and FED expectations. Right,
[2:57] Speaker 1: are you in the camp? You know, insofar as obviously
[2:59] Speaker 1: the be a massive impact on emerging markets and Asian
[3:02] Speaker 1: economies and for the Japanese yen, as we've been talking about,
[3:05] Speaker 1: which can be you in when it comes to the
[3:07] Speaker 1: FED because Vetcher Walsh has kind of been keeping markets
[3:11] Speaker 1: and economists in the dark as to how he plans
[3:13] Speaker 1: to travel this road of finding inflation.
[3:19] Speaker 3: Yeah, I think, yeah, I think the concern around the
[3:21] Speaker 3: FAT is no longer you know, whether it would increase rates,
[3:24] Speaker 3: which is always a case for emergent markets or whether
[3:27] Speaker 3: or not it would actually stay pod. The concern here
[3:29] Speaker 3: is that there is just not much visibility, right, and
[3:32] Speaker 3: I think a level of transparency is not going to
[3:35] Speaker 3: cause currencies to be weaker in the region. It's just
[3:37] Speaker 3: going to cause a lot more volatility and therefore a
[3:39] Speaker 3: lot more corrections post fact. And I think that is
[3:42] Speaker 3: you know, something that central bites can't really grapple with
[3:45] Speaker 3: at the same time, whether they have to to still
[3:47] Speaker 3: deal with, you know, inflationary risks domestically. So I think
[3:51] Speaker 3: that that opagueness is going to drive more volatility, but
[3:55] Speaker 3: also possibly more policy errors are coming out of Asia.
[4:01] Speaker 1: We now have another sort of pause when it comes
[4:04] Speaker 1: to potential US around talks. We see the oil market
[4:08] Speaker 1: certainly reacting, but how do you view the pass through
[4:11] Speaker 1: when it comes to the recent revival when the gains
[4:14] Speaker 1: that we have seen in oil prices.
[4:18] Speaker 3: Yeah, I think the past through well, even before you
[4:22] Speaker 3: know where we were the CEAS file point, which was
[4:24] Speaker 3: you know, sometime in June, it did feel like, you know,
[4:29] Speaker 3: oil prices might have bottom out and you know, inflation
[4:32] Speaker 3: expectations could have been arrested. But obviously since then there's
[4:36] Speaker 3: a lot of all of the listing the oil prices,
[4:37] Speaker 3: and I think for Asian economies, the past through hasn't
[4:41] Speaker 3: really been complete, right. We do have a lot of
[4:45] Speaker 3: the h a lot of the hitline CPI being muted
[4:50] Speaker 3: because of some of these government interventions they were in
[4:53] Speaker 3: place that helps subsidize and cap the headline crisis. But
[4:57] Speaker 3: underlying inflation expectations have actually been increased, and a lot
[5:01] Speaker 3: of the economies where we see more complete pass through,
[5:05] Speaker 3: where you know, there hasn't been the influence of subsidies,
[5:08] Speaker 3: prices have actually started trending up and hasn't really stopped
[5:11] Speaker 3: that up trend. So, you know, in the coming months,
[5:14] Speaker 3: and especially in the CPI data this week, we are
[5:18] Speaker 3: expecting that inflation will continue to stay quite elevated. And
[5:21] Speaker 3: that reflects not the fact that the headline breadth prices
[5:23] Speaker 3: have come down on gonna. It reflects the fact that
[5:26] Speaker 3: refined fuel, which is what matters more for Asian economies,
[5:29] Speaker 3: have continued to stay quite elevated, and I think that
[5:32] Speaker 3: will keep central banks in the region on a more
[5:35] Speaker 3: hawkish path than we previously anticipated.
[5:38] Speaker 2: Louise lou head of Asia Economics at Oxford Economics, speaking
[5:43] Speaker 2: with Bloomberg's Paul Allen and Heidi Stroud Watts bringing you
[5:47] Speaker 2: their conversation on the Daybreak Asia podcast. Welcome back to
[5:58] Speaker 2: the Daybreak Asia Podcast. I'm Charlie pellantt amid us intervention
[6:02] Speaker 2: with the yen in Japan, bond investors say the risk
[6:05] Speaker 2: of a deeper treasury route is rising as FED chair
[6:09] Speaker 2: Kevin Walsh keeps investors in the dark about how officials
[6:13] Speaker 2: will respond to the evolving economy. The treasury market is
[6:16] Speaker 2: signaling that Warsh's inflation fighting credibility is eroding after he
[6:21] Speaker 2: declined to outline how he plans to curb price pressures.
[6:25] Speaker 2: When policymakers left interest rates unchanged last week, the result
[6:30] Speaker 2: is steeper borrowing costs for the government, homeowners and companies,
[6:34] Speaker 2: with the rate on the thirty year treasury at a
[6:37] Speaker 2: nineteen year high. And with more on the story, as
[6:40] Speaker 2: well as an outlook on South Korean exports, we heard
[6:43] Speaker 2: from Julia Wong, North Asia CIO for Nomura International Wealth
[6:48] Speaker 2: Management and she spoke with Bloomberg's Paul Allen and Heidi
[6:52] Speaker 2: Stroud Watts.
[6:53] Speaker 5: We think that the focus for yen this week obviously
[6:57] Speaker 5: based on the intervention given what's being flat by the
[7:00] Speaker 5: officials UH, and that's going to determine against the near
[7:03] Speaker 5: term direction for the currency.
[7:05] Speaker 3: UH.
[7:06] Speaker 5: If there's a forceful intervention, we could see probably at
[7:09] Speaker 5: the yen reate testing one fifty five or levels around that.
[7:14] Speaker 5: Is that really a game changer for the currency. Look,
[7:17] Speaker 5: we think that you know, the currency is really driven
[7:21] Speaker 5: by uh the inflation in Japan is driven by oil
[7:24] Speaker 5: prices and the concern over fiscal fiscal policy, and that
[7:29] Speaker 5: really translates into the rates differential between the US and Japan.
[7:34] Speaker 5: Uh that macro backdrop is not getting more favorable for
[7:38] Speaker 5: the end is actually going against the n SO. I
[7:41] Speaker 5: think against this big backdrop of from a macro perspective,
[7:45] Speaker 5: the fax policy strategy, maybe it's more about uh SO
[7:49] Speaker 5: slowing the pace of en depreciation rather than really seeking
[7:53] Speaker 5: to turn it around from a directional perspective. So, yes,
[7:56] Speaker 5: we think that for the for the week, probably we
[7:59] Speaker 5: can see some more trupiness and probably more temporary yeah
[8:03] Speaker 5: and strengths. But we do think that this does not
[8:06] Speaker 5: change actually direction for dollar in and probably could still
[8:10] Speaker 5: continue to go higher once the intervention is behind us.
[8:15] Speaker 4: Yeah, what's the role of the Bank of Japan and
[8:17] Speaker 4: all of this sort. They don't even appear to be
[8:19] Speaker 4: playing a role at the moment. I'm more doing a
[8:22] Speaker 4: sloth impersonation. If Friday's meeting was anything to go by,
[8:25] Speaker 4: it do you see the Bank of Japan feeling motivated
[8:28] Speaker 4: now to Titan sooner rather than later.
[8:32] Speaker 5: Well, I think there is some motivation because you know,
[8:36] Speaker 5: the obviously the lack of action from the Bank of
[8:40] Speaker 5: Japan slower the expected move has been one of the
[8:44] Speaker 5: one of the reasons. And you can see some upgrades
[8:46] Speaker 5: of inflation forecasts. Uh, some internal more internal debate at
[8:50] Speaker 5: the BOJ But does this is this enough to really
[8:54] Speaker 5: propel them to make take a more aggressive stance overall
[8:57] Speaker 5: on the pace of rate hike. We actually do doubt it.
[9:01] Speaker 5: So I think there's a case for maybe moving forward
[9:03] Speaker 5: the December rate hike now to October, so we do
[9:06] Speaker 5: see that as a more live meeting. But we still
[9:10] Speaker 5: see as roughly like a you know, once every six
[9:13] Speaker 5: month type of policy rate move. And it's really hot
[9:16] Speaker 5: given what's going on in the global economy from Middle
[9:19] Speaker 5: eastward to what's going on now the tach trait and
[9:23] Speaker 5: all of that disruption that's playing out in the equity market,
[9:27] Speaker 5: we actually see a very tall hurdle for the Bank
[9:30] Speaker 5: of Japan to really go much faster than our forecast
[9:34] Speaker 5: for two rate hikes every year. So if they move
[9:36] Speaker 5: forward the December meeting to October, we actually still see
[9:40] Speaker 5: the next rate hike probably somewhere in mid twenty twenty seven.
[9:44] Speaker 1: So I guess the question is if they don't feel
[9:46] Speaker 1: like they can move any faster, that phade from this
[9:50] Speaker 1: intervention could come pretty quickly without fundamental restructuring of that
[9:55] Speaker 1: differential between the US and Japan.
[9:59] Speaker 5: Yeah, so I think the differential unfortunately is moving away
[10:02] Speaker 5: from from Japan. Uh. And you know, if the US
[10:06] Speaker 5: front end have priced too hike, so maybe even more
[10:10] Speaker 5: than that by the fad in the next year or so.
[10:13] Speaker 3: Uh.
[10:14] Speaker 5: The Bank of Japan, we don't think that they really
[10:16] Speaker 5: have what it takes to move faster. So if the
[10:19] Speaker 5: for the forward markets are right, then we probably have
[10:22] Speaker 5: seen the narrows of rate differential between Japan and US
[10:25] Speaker 5: in the cycle, and going forward that rate differential is
[10:28] Speaker 5: going to actually widen. So that speaks to maybe more
[10:31] Speaker 5: strengths for the dollar, at least particularly from the front
[10:34] Speaker 5: end rate perspective. Less so for Japan, so I think
[10:37] Speaker 5: that interest rate differential really does determine a lot of
[10:42] Speaker 5: where dollar yen is. But of course the carriage trade, uh,
[10:46] Speaker 5: what the sentiment is for equity market also matters from
[10:50] Speaker 5: a carriage traite perspective, that is going through a little
[10:53] Speaker 5: bit of volatility at the moment. But our thesis is
[10:56] Speaker 5: that we think that there's enough growth uh, both in
[11:00] Speaker 5: the real economy as well as powered by AI that
[11:03] Speaker 5: probably will still keep equity market in a book market
[11:06] Speaker 5: range for the next year. So both of that factor
[11:09] Speaker 5: speaks to I think probably a still continue grind up
[11:13] Speaker 5: higher for dollar, yet maybe at a more gradual pace
[11:16] Speaker 5: now because the Bank of Japan and Treasury now is
[11:19] Speaker 5: showing their hands and the strong preference for more gradual
[11:22] Speaker 5: pace of depreciation.
[11:24] Speaker 1: Jolly, let's talk a little bit about that tech story,
[11:26] Speaker 1: because obviously it's been pretty chaotic, particularly for Korean markets,
[11:31] Speaker 1: and that's sort of still bleeding through. If you look
[11:34] Speaker 1: at this as a leverage washout if you will, and
[11:37] Speaker 1: we kind of resume gains, or do you look at
[11:39] Speaker 1: this as is further to go for a kind of
[11:42] Speaker 1: fundamental restructuring of how investors view the amount of investment
[11:46] Speaker 1: that's going to AI and how much you know they're
[11:49] Speaker 1: going to say that this is worth.
[11:52] Speaker 3: Yeah.
[11:52] Speaker 5: So I think that overall very quickly for the overall
[11:56] Speaker 5: tax trade. I think you know, there are two headwing.
[11:59] Speaker 5: One of the head when is long and needs going
[12:02] Speaker 5: ever higher. It's not a problem for tech for now,
[12:05] Speaker 5: but it would be for medium term if we continue
[12:07] Speaker 5: to see a gradual grind up higher in long lane
[12:10] Speaker 5: race in the US. The second headwind is the volatility.
[12:14] Speaker 5: That's because of the leverage and something that we were
[12:16] Speaker 5: worrying about in our media outlook that sometimes sometimes the
[12:19] Speaker 5: price is right, but the market structure through which we
[12:22] Speaker 5: got there speaks to incredible volatility and fragility to come.
[12:27] Speaker 5: So Carea is a very good example of that. I
[12:29] Speaker 5: continue to see that being a headwind for this market,
[12:32] Speaker 5: the particularly for memories. I do think that the fundamental
[12:36] Speaker 5: has changed a little bit compared to where we like
[12:39] Speaker 5: to trade the most, which was early in the year.
[12:41] Speaker 5: That is because even though the men's supply imbalance is
[12:44] Speaker 5: still there, we're heading to twenty twenty seven now and
[12:47] Speaker 5: that is when more of the capext will start to
[12:49] Speaker 5: come through. And now you have China joining the supply
[12:52] Speaker 5: landscape as well, so that speaks to maybe potentially the
[12:55] Speaker 5: risk of a quicker adjustment on the demand's side. We
[12:58] Speaker 5: do see more rationalized by hyperscalers in the US from
[13:02] Speaker 5: a demand side perspective as well, So mess applying balance
[13:05] Speaker 5: is still there, but we're counting down to the time
[13:08] Speaker 5: to get more corrected. So I think that we are
[13:11] Speaker 5: probably more new too positive, but less positive compared with
[13:15] Speaker 5: early in the year, and the volutility from a leverage
[13:17] Speaker 5: perspective doesn't help that. So our preferred way to play AI,
[13:21] Speaker 5: which is still a fundamental thing for next two to
[13:24] Speaker 5: three years, is actually look at you know, what's been
[13:27] Speaker 5: a message from the earning season this time, and that
[13:30] Speaker 5: is that some companies, not everyone, are able to money tize,
[13:34] Speaker 5: and investors reward those who are able to monetize by
[13:38] Speaker 5: allowing them to build up more leverage and borrow more.
[13:41] Speaker 5: So we think that actually there's some that have shown
[13:44] Speaker 5: the strength in the earning season, there's some maybe they
[13:46] Speaker 5: are punished a little bit more than we think they
[13:48] Speaker 5: should be. So a lot of the focus probably will
[13:51] Speaker 5: go back, I think, to some of the hyperscalers in
[13:54] Speaker 5: the US now, given that the earning strength has been
[13:56] Speaker 5: so impressive, and I think that's probably in the market
[13:59] Speaker 5: where the rich reward the pocket market where the rich
[14:02] Speaker 5: reward is the best of an AI trade perspective.
[14:07] Speaker 4: In terms of the AI trade. What's your approach to
[14:09] Speaker 4: the China side of that story, how's your allocation there?
[14:12] Speaker 4: Because you know, we've got the Shanghai composite, the cs
[14:15] Speaker 4: I three hundred, both soft year to date, this is
[14:18] Speaker 4: a market relatively insulated from the Iran War other such factors,
[14:23] Speaker 4: and a escent but pretty successful AI story as well.
[14:26] Speaker 4: What's your allocation?
[14:29] Speaker 5: Yeah, So for China AI, I think there's two three
[14:33] Speaker 5: broad parts. The parts, way like the most at the
[14:36] Speaker 5: moment is actually still the hardware story that goes into
[14:39] Speaker 5: the global supply chain because we are positive about overall
[14:42] Speaker 5: IF development. We see a lot of continued capacks even
[14:46] Speaker 5: though not ever ever higher, so there's more rationality, but
[14:50] Speaker 5: still overall capack strength is going higher. So we think
[14:53] Speaker 5: that the part of China supply hardware space that goes
[14:56] Speaker 5: into the global supply chain can still benefit the risk
[15:00] Speaker 5: of in expual band et cetera. Notwithstanding, that's still the
[15:03] Speaker 5: part where we see the most visibility in terms of
[15:05] Speaker 5: earning growth. China still also does have a lot of
[15:09] Speaker 5: strength in terms of models, but we think that that's
[15:11] Speaker 5: very hard to monetize because the competition is so intense,
[15:15] Speaker 5: So watching closely for clue or innovation, but that's not,
[15:19] Speaker 5: you know, very profitable at the moment. And the last
[15:21] Speaker 5: part is China. China large cap tech and they've rallied
[15:26] Speaker 5: in July because of the rotation into underperformers, so they've
[15:31] Speaker 5: gone up quite a bit. Maybe it's still a little
[15:33] Speaker 5: bit more to go, but we're heading in to earnings
[15:35] Speaker 5: as well for those guys. And the takeaway from message
[15:38] Speaker 5: earning season message overall this time is that investors will
[15:41] Speaker 5: scrutinize company by company your ability to really monetize the
[15:45] Speaker 5: cap AAX. So if you believe that certain companies can monetize,
[15:48] Speaker 5: then their stock is due to buy. But they've actually
[15:51] Speaker 5: rad it quite a bit, so I think from a
[15:52] Speaker 5: rich reward perspective, hardware, an overall global supply chain within
[15:57] Speaker 5: China is still we want to go. So that's the
[15:59] Speaker 5: space we'll probably would look to be buying a dip
[16:01] Speaker 5: or a buy into weakness.
[16:03] Speaker 2: Julia Wong North Asia CIO for Nomura International Wealth Management,
[16:08] Speaker 2: speaking with Bloomberg's Paul Allen and Heidi Stroud Watts, bringing
[16:12] Speaker 2: you their conversation on the Daybreak Asia podcast. Thanks for
[16:18] Speaker 2: listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.
[16:23] Speaker 2: Each weekday, we look at the story shaping markets, finance,
[16:26] Speaker 2: and geopolitics in the Asia Pacific. You can find us
[16:30] Speaker 2: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere
[16:34] Speaker 2: else you listen. Join us again tomorrow for insight on
[16:37] Speaker 2: the market moves from Hong Kong to Singapore and Australia.
[16:42] Speaker 2: I'm Doug Chrisner, and this is Bloomberg

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