Yen gains after BOJ, AI jitters drive Treasury rally and weigh on dollar
TLT•The yen strengthened after the Bank of Japan held its policy rate at 1.25% and raised its inflation forecast, while AI-related selling sent investors toward Treasuries and pushed US yields to their lowest in more than a month. The dollar index was slightly lower at 101.77.
1. BOJ holds rates steady
The Bank of Japan kept rates at 1.25%, as expected, but raised its inflation forecast and reiterated its readiness to increase borrowing costs. The yen rose to 157.115 per dollar after the decision, erasing most of its monthly losses.
2. Treasury yields retreat
The dollar was weighed by lower Treasury yields as investors sought safe-haven bonds amid selling in AI shares. Alphabet results rekindled concerns about AI spending, and the benchmark 10-year Treasury yield fell to 4.8958%, while the 30-year yield declined to 5.2623%; both were at their lowest in more than a month.
3. Central banks pause
The European Central Bank, Federal Reserve and Reserve Bank of New Zealand also held rates steady this week. Strategists said the global tightening cycle could continue, while investors awaited the Bank of England and Reserve Bank of Australia decisions next week.
