Core Viewpoint - The potential for coordinated yen buying by Tokyo and Washington has provided temporary support for the Japanese yen, but historical context suggests that the effectiveness of such interventions may be limited, particularly as Prime Minister Sanae Takaichi's election campaign focuses on increased stimulus measures [1][2]. Group 1: Economic Context - The yen's ongoing decline has raised concerns about Japan's financial stability, coinciding with record-high yields on Japanese government bonds, which typically would support the currency [3]. - Takaichi's election campaign includes a pledge to suspend the consumption tax on food, which generates approximately 5 trillion yen ($32.36 billion) annually, without a clear plan to offset the revenue loss [6]. Group 2: Market Reactions - Market participants, including fund managers, predict that the yen could weaken to 180 per dollar if Takaichi wins decisively and pursues expansive stimulus policies [4]. - There is skepticism regarding the effectiveness of any intervention by the Ministry of Finance, as many investors lack confidence in Japan's fiscal management, given that government debt is around 230% of GDP, the highest among developed nations [5]. - Recent market activity showed a sudden spike in the yen's value, attributed to rate checks from the Bank of Japan and the Federal Reserve Bank of New York, despite traders selling off the yen amid hawkish signals [7].

Core Viewpoint - Japan is on the verge of intervening in the currency market for the third time in recent years due to a persistently weak yen, but analysts believe such intervention may be ineffective and could lead to further selloffs [1][4]. Currency Market Situation - The yen has reached a 10-month low, declining alongside bonds since Sanae Takaichi assumed leadership of Japan's ruling party, with proposals for increased government spending [2]. - Japan's cabinet has approved a stimulus package worth 21.3 trillion yen ($135 billion), and Finance Minister Satsuki Katayama has issued warnings about potential yen intervention if market movements become disorderly [3]. Intervention Expectations - Analysts anticipate that the government may issue verbal warnings before actual intervention occurs, likely around the 158-162 yen per dollar range [3]. - Previous interventions in 2022 and mid-2024 were successful in strengthening the yen, but current conditions may make similar outcomes more challenging due to a lack of significant short positions against the yen [4]. Market Reactions - Initial intervention could lead to increased short positions, resulting in more selling pressure on the yen shortly after the intervention [5]. - The current exchange rate is at 156.7 yen per dollar, approaching a critical level of 160 yen, which could trigger significant market reactions if no intervention occurs [6]. Speculation and Market Sentiment - Traders recall the intervention levels from the previous year, around 157 to 162 yen, and if no action is taken as the yen nears 160, speculation about a weaker intervention stance may lead to aggressive selling of the yen [7].

Group 1: Depreciation of Assets - The rapid depreciation of chips used by hyperscalers raises questions about the accuracy of asset valuation [2][4] - There is a concern regarding whether hyperscalers are marking their assets correctly, particularly the accelerators and chips [2][4] - A significant investment, such as 100 billion USD in accelerators, may lose value within 6 to 12 months, prompting scrutiny from councils [3] Group 2: Treasury Market Reactions - The Treasury market is responding to weak US labor market data, leading to expectations of rate cuts from the Federal Reserve [5][6] - The market's reaction is notable as it is the first opportunity to respond to the ADP figures indicating a weakening labor market [6] - There is a split among Federal Reserve speakers regarding inflation and labor market concerns, creating uncertainty about future monetary policy [6][7] Group 3: Japanese Yen and Market Intervention - Japanese officials have specific thresholds for market intervention to stabilize the yen, which are not yet met [10] - The rhetoric from the Japanese administration regarding currency stabilization is increasing as the yen remains under pressure [11] Group 4: SoftBank and Nvidia Stake - There is uncertainty surrounding SoftBank's sale of its Nvidia stake and its implications for company valuation [12][14] - The market reaction to SoftBank's trading has been volatile, reflecting broader concerns about valuation in the tech sector [13][14]