By Kosaku Narioka 
 

Japanese government bond yields and stocks dropped Monday after U.S. and Japanese authorities signaled that they are ready to step in to prop up the yen, sparking a rebound in the Japanese currency.

The 10-year Japanese government bond yield was down 4.5 basis points to 2.210% as the yen's appreciation eased fears about a near-term interest rate increase by the Bank of Japan.

A yen recovery would likely ease inflation expectations and lower the prospects of an imminent BOJ rate increase, Mitsubishi UFJ Morgan Stanley Securities strategists said in a note.

Japan's Nikkei Stock Average was recently 1.5% lower, dragged by falls in exporters such as makers of cars and electronics goods. Honda Motor was down 4.0%, Nissan Motor was 3.7% lower and Panasonic Holdings was down 3.8%.

A stronger yen decreases the value of profits earned abroad in yen terms. The yen was trading at 154.46 to the dollar on Monday morning, compared with 158.66 as of Tokyo's stock market close on Friday.

The yen bounced back from its recent slide after the Federal Reserve Bank of New York reached out to potential trading counterparties at the direction of the Treasury Department on Friday for so-called rate checks, The Wall Street Journal reported, citing people familiar with the matter. Rate checks are inquiries about the pricing available and can precede a direct intervention in the currency market.

In Japan, officials have been warning about its currency's weakness for months and have said the government will take necessary measures against speculative and excessive movements.

"The cat-and-mouse game with the yen is likely to carry over," Marc Chandler, chief market strategist at Bannockburn Capital Markets, said in a note. "But the one-way market has been broken, at least for the time being."

U.S. involvement is entirely plausible, Brown Brothers Harriman said in a note, adding that Treasury Secretary Scott Bessent had voiced concerns about the sell-off in Japanese government bonds and its spillover into the U.S. Treasury market.

Meanwhile, gold climbed above the $5,000-per-ounce threshold for the first time and silver rose to a fresh all-time high due to rising fears about a partial U.S. government shutdown and continued geopolitical uncertainty in the Middle East.

Spot gold was 1.2% higher at $5,049.68 a troy ounce and spot silver was recently up 3.8% at $107.22 an ounce.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

January 25, 2026 21:01 ET (02:01 GMT)

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