Yen powers toward biggest two-day gain since August intervention

Global stocks and bonds staged a relief rally on Thursday as the Japanese yen powered toward its biggest two-day gain since early August, bond yields retreated from multi-decade highs, and oil prices pulled back after President Donald Trump signaled that renewed U.S. strikes on Iran would be short-lived.

Yen Leads Currency Markets

The yen strengthened past 157 per dollar on September 3, extending a sharp move that began the prior session when hawkish Bank of Japan board member Hajime Takata raised the possibility of outsized or back-to-back interest rate hikes. BOJ Governor Kazuo Ueda had also signaled a strong chance of a rate increase at the central bank's September 18 meeting, while U.S. Treasury Secretary Scott Bessent voiced support for "decisive" monetary steps to combat yen weakness.live.euronext

The currency's nearly 2% gain over two days marked its strongest such rally since the historic joint U.S.-Japan intervention in early August. Analysts debated whether authorities had intervened again or merely conducted a "rate check," in which regulators query exchange rates without placing orders. "Unless the yen strengthens further from here, the magnitude of the move does not suggest direct market intervention," said Takafumi Onodera, first vice president at Mitsubishi UFJ Trust and Banking Corporation. Bloomberg reported Thursday that the BOJ is set to favor a 25-basis-point hike with a "flexible" future pace, a report that briefly interrupted the yen's advance.reuters+2

Bond Yields Retreat, Stocks Gain

Sovereign bond yields fell from levels that had rattled investors earlier in the week. The benchmark U.S. 10-year Treasury yield dropped about 3 basis points to 4.766%, while the 30-year Japanese government bond yield sank 8 basis points to 4.085% after a sale of the securities drew decent demand. Britain's 10-year gilt yield also eased after touching its highest level since 2007.devdiscourse+1

MSCI's ↘ 0.29% broadest index of Asia-Pacific shares outside Japan rose 0.8%, and European futures pointed modestly higher. The S&P 500 had snapped a three-day losing streak on Wednesday, gaining 0.5%. Dell Technologies ↗ 1.50% surged nearly 16% on strong AI server demand, while Nvidia ↗ 0.84% added 3.2%.kelo+2

Oil, Iran, and the Fed

Oil eased after Trump told reporters Wednesday he did not expect the U.S. bombing campaign against Iran to last "much longer," helping Brent crude slip about 1% to around $95 a barrel. The conflict — now in its sixth month — had pushed benchmark crude up roughly 25% in less than a month, fueling inflation fears that contributed to the bond selloff.globalbankingandfinance+2

Attention now turns to Friday's U.S. nonfarm payrolls report, which could determine whether the Federal Reserve raises rates at its September 15–16 meeting. Traders assign roughly a 60% chance of a 25-basis-point hike, up from less than 40% a week ago, according to the CME Group's ↘ 0.27% FedWatch tool. New York Fed President John Williams tempered expectations on Wednesday, saying he was "still collecting information," while noting that higher long-term yields reflect a solid economy. "His comments by no means rule out a September hike, but they challenge the market view that a September rate hike is clearly odds-on," said Krishna Guha at Evercore ↗ 0.34%.tradingview+2