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    The US issued 10-year notes at 4.033%, causing downward pressure on yields and weakness in USD/JPY

    by VT Markets
    /
    Sep 10, 2025
    The US has recently completed a $39 billion auction of 10-year notes, with the yield set at 4.033%. This is slightly lower than the previous rate of 4.046%. The auction showed a 1.3 basis point stop through. As a result, yields have started to decrease, putting pressure on the USD/JPY exchange rate.

    Strong Demand Hints at Lower Rates

    Today’s 10-year Treasury auction saw strong demand, clearing at a yield of 4.033%, which was lower than expected. This suggests that we might see interest rates fall even further. Many investors believe that the Federal Reserve’s cycle of rate hikes is finished and want to lock in current yields. It could be a good time to think about buying calls on Treasury bond futures or related ETFs. This shift in yields also affects currency markets, particularly the USD/JPY pair. Lower US rates mean the dollar offers a smaller yield advantage over the yen, leading to a drop in the pair right after the auction results. In the next few weeks, we might explore strategies that benefit from a lower USD/JPY, such as buying puts or selling futures contracts. Looking back at the bond market rallies from late 2023, we often saw a rush towards government debt before increased stock market volatility. The CBOE Volatility Index (VIX) has already risen to 16.2 from its summer lows, and this auction result could push it even higher. It might be a good time to buy protective puts on major stock indices like the S&P 500.

    Economic Data Influences Markets

    The bond market’s appetite is shaped by recent economic data, which we should monitor closely. Last week’s Non-Farm Payrolls report indicated job growth slowed to 150,000, falling short of expectations and suggesting a cooling economy. Now, all eyes are on the Consumer Price Index (CPI) report set for next Tuesday. A lower inflation reading could support our view and likely accelerate the decline in yields. Create your live VT Markets account and start trading now.

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