Isfar Munir, head of interest rate research at PNC, notes that if Japan's Ministry of Finance needs to raise funds for future currency intervention, it is unlikely to sell even medium-term US Treasuries, so the impact on long-term US Treasury yields is expected to be limited.

Although the 30-year US Treasury bond was sold off last week when signs of yen intervention emerged, the negative value of the 30-year swap spread narrowed during the same period. If the move in long-end Treasuries was reflecting currency intervention, the negative value of the swap spread would have been expected to widen further.

If subsequent intervention were to have an impact on longer-term yields, it would likely be transmitted through some kind of "market perception channel." However, this would require the market to interpret the intervention as a signal of reduced demand for US Treasuries over a longer period.

"While this scenario is possible, in our view it is more of a tail risk," Munir wrote. "Currency intervention is inherently temporary and is unlikely to convey much information to the market about Japan's Ministry of Finance's long-term demand for US Treasury assets."

A more likely channel to affect long-term US Treasuries is the spread of Japan's current fiscal concerns into a global fiscal expansion narrative. While this logic is reasonable, it may require more time and evidence to prove that the scale of global debt issuance is exceeding market demand at current yield levels.

Japan could also implement some form of quasi- control measures, prompting domestic fixed-income asset managers to reduce their holdings of overseas assets and increase their holdings of Japanese government bonds. Given the large scale of these overseas asset holdings, this could have a broad impact on the entire US Treasury yield curve.