Brian Chappatta, Columnist

Steven Mnuchin Is a Rock Star to Japanese Investors

Currency-hedged Treasury yields are as positive as they have been in years, suggesting a source of demand for bigger U.S. auctions.

May 7, 2020 at 4:39 PM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Big in Tokyo.
Photographer: Al Drago/Bloomberg

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U.S. Treasury Secretary Steven Mnuchin most likely won a lot of fans among Japanese bond buyers this week.

His department’s announcement on Wednesday that it would increase issuance of longer-term debt to cover America’s swelling budget deficits surprised stateside bond traders, leading them to sell 10-year and 30-year Treasuries. The repricing was enough to push the currency-hedged yield on 10-year U.S. notes to 0.07% for Japanese investors. While that doesn’t sound like much, it’s the most positive since October 2018, when the Federal Reserve was still raising interest rates, and beats domestic Japanese yields of zero.