Mitsubishi UFJ: U.S. support for Japan's stable exchange rate helps alleviate selling pressure on U.S. bonds.

Mitsubishi UFJ believes that the U.S. support for Japan in stabilizing the yen should help limit the sell-off of U.S. Treasuries, mitigate the impact on the bond market, and ultimately reduce the scale of actions required. "The U.S. is concerned that if Japan continues to intervene in the foreign exchange market by directly selling U.S. Treasuries, it could disrupt the Treasuries market," said Mitsubishi UFJ forex analyst Lee Hardman, who mentioned that Japan might utilize the Federal Reserve's Foreign and International Monetary Authorities repo facility. Hardman wrote that if coordinated intervention proves more effective, "this could mean that the scale of intervention ultimately required is smaller, thereby reducing the necessity to sell U.S. Treasuries."