JPY: USD/JPY-Continues To Press MOF Resolve, Strong USD Complicates Intervention

The 10-year JGB auction delivered strong results, with the low price beating expectations at 98.79, according to the Bloomberg dealer poll. Moreover, the cover ratio increased to 3.9039x from 2.5651x. The tail also shortened dramatically to 0.03 from 0.36.

• This performance came with an outright yield that was 20bps above the level of last month's auction and at a fresh cycle high.
• The 2s/10s yield curve was ~15bps steeper than last month's auction and at a cycle high. By contrast, the 7s/10s curve, a measure of value between JB1 futures and the 10-year, was little changed from last month and sat comfortably inside the past year's range.
• In early afternoon Tokyo trading, the cash 10-year and JGB futures are dealing little changed. 

Milk Road wrote, "Polymarket had it at 79% odds to get signed into law in 2026 - before cratering down to 62% in a span of 30 mins. (Does someone know something?). A committee markup is where senators sit down, amend a bill, and vote it out of committee or kill it. Getting to markup means the bill already has enough support to move." It turns out the American Bankers Association is attempting a last ditch effort to close what it calls a stablecoin yield loophole.

• Milk Road on X: "Senator Moreno says banks are in full panic mode over the CLARITY Act. Banks have been taking your deposits, lending them out at 7-8%, and handing you 0.5% back. Stablecoins could cut out that spread entirely. "For decades, these banks have treated your deposits like their personal piggy bank, paying you next to nothing while lending your money out for massive profits and executive bonuses." The American Bankers Association is already fighting back, with the Market Structure Bill is heading to a vote soon."
• zerohedge on X: "American Bankers Attempt Last Ditch Effort To Kill Crypto Market Structure Bill Regarding Stablecoins."  https://www.zerohedge.com/crypto/senate-schedules-clarity-act-markup-banking-lobby-democrats-mount-resistance
• "American Bankers Association (ABA) CEO Rob Nichols sent an emergency Sunday letter to every bank CEO in the country, urging “immediate engagement” against what he called a stablecoin yield loophole in the Digital Asset Market Clarity Act, days before a Senate Banking Committee markup scheduled for Thursday."

The Japanese Ministry of Finance (MoF) sells Y1,951.0bn 10-Year JGBs:

• Average Yield: 2.540% (prev. 2.350%)
• Average Price: 98.89 (prev. 100.40)
• High Yield: 2.544% (prev. 2.395%)
• Low price: 98.86 (prev. 100.04)
• % Allotted At High Yield: 27.5558% (prev. 54.1553%)
• Bid/Cover: 3.9039x (prev. 2.5651x)