CITIC Securities said US-Japan joint FX intervention aims to prevent spillovers
from sustained yen weakness. Japan’s inflation remains below the BOJ target,
limiting willingness to tighten policy; Sanae Takaichi’s proposed tax cuts could
widen Japan’s fiscal gap and erode confidence in yen assets. The US is concerned
that yen stabilization or Japanese reductions in US Treasury holdings could,
amid elevated US debt supply, push up long-end US yields. Short-term
intervention should help stabilize expectations, but with US-Japan rate
differentials still wide the scope for a sustained large yen rally is limited.
The report adds that US equities retain clearer advantages over Japanese stocks
on earnings growth, industry structure and the AI supply chain.
