Bonds
Yen-Hedged US Bond Yields Are Positive for First Time Since 2022
- Dollar hedge costs for Japan investors have fallen on Fed cuts
- Hedged US yields are still below similar-tenor Japanese bonds
Japan’s currency weakened about 7% against the dollar from January to October, even after the BOJ tightened policy twice in that period.
Photographer: Tomohiro OhsumiThis article is for subscribers only.
Currency-hedged Treasury yields for Japanese investors have risen above zero for the first time in more than two years as the Federal Reserve cut interest rates.
Yen-hedged 10-year US notes yielded 0.28%, after staying below zero since September 2022. Hedge costs, which are largely driven by differences in short-term interest rates between two economies, have slid about 170 basis points from a peak set in October 2023 as the Fed embarked on policy easing while the the Bank of Japan raised borrowing costs.