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Halifax Regional Police release Dartmouth suspect’s name and photo | SaltWire #news #novascotiaORLANDO, Florida - Japan's yen-buying currency market intervention may not be sending tremors through the U.S. bond market just yet, but that calm could be disturbed if Tokyo gets drawn into a drawn-out battle to prevent the exchange rate from weakening much further.
Japan has a pretty deep pool of dollar deposits it can dip into to buy yen, but it is not limitless. If it is drained, bond investors may reasonably wonder whether Japan, the world's largest overseas holder of Treasuries, will turn to selling U.S. bonds. "But in the unlikely event that MoF gets into a protracted fight with FX markets, we might expect some knock on effects on Treasury market yields, especially the 2-5Yr segment with the potential of spillovers to the rest of the curve," he adds.Japan is the world's largest foreign holder of Treasuries, but its footprint in the Treasuries market is tiny compared to what it once was.
This reflects a broader trend. China once held 14% of all outstanding Treasuries but now holds less than 3%, and foreign central banks' share of all outstanding Treasuries has shrunk to 14% from a record 40% in June 2008. As the foreign official sector's presence in the U.S. bond market has shrunk, the foreign private sector's has grown. Its share of Treasuries outstanding is now around 17%, the highest in around 15 years.
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