Japan and US launch joint yen intervention

The intervention follows a period of intense scrutiny regarding the Bank of Japan’s monetary policy, particularly after the central bank delayed an interest rate hike following a recent earthquake. Markets are now weighing the potential for a Federal Reserve rate increase next month, alongside concerns that Japan, the largest foreign creditor to the U.S. government, might liquidate Treasury holdings to fund further currency support. Scott Bessent confirmed that a Fed repo facility has been activated to use Japan’s bond holdings as collateral, potentially mitigating the impact on U.S. bond yields.

Simultaneously, global sentiment has shifted following President Trump's pause in military operations against Iran, which triggered a 5% drop in oil prices to below $84 per barrel. In the corporate sector, second-quarter earnings remain robust, with S&P 500 profit growth tracking at 47%—nearly double initial estimates. This performance, driven largely by Big Tech’s AI investments and strong banking returns, continues to encourage investors to favor sectoral rotation over broad market exits, despite localized volatility such as the sharp decline in AstraZeneca shares on reports of potential merger talks with Bristol Myers Squibb.