You have to wonder where USD/JPY would be if 10-year yields were still at 5%.
As it stands, 10s are down 0.4 bps to 4.56% today after a 12 bps drop yesterday. Despite that, USD/JPY has been steadily climbing and briefly touched above 151.00. It’s been a steady march higher today and now the pre-BOJ high of 151.74 is within reach.
Despite falling yields, USD/JPY could be benefiting from diminished Fed rate cut hopes. Last week, 100 bps of cuts were priced in for next year, that’s drifted down to 87 bps, with cuts starting to be fully priced in for June.