The Japanese yen strengthened toward 158 per dollar, while Japan’s 10-year government bond yield rose toward 2.7% after recovering from a four-month low. Hawkish comments from Bank of Japan officials reinforced expectations for a December rate increase and further monetary tightening next year, potentially bringing borrowing costs closer to 2%. BOJ Governor Kazuo Ueda said underlying inflation should remain near the central bank’s 2% target while highlighting upside risks. Ministry of Finance data showed Japan bought ¥15.399 trillion, or about $97.16 billion, across three intervention sessions on July 30, July 31 and Aug. 3. The ¥7.976 trillion purchase on July 30 was a record in the ministry’s data series dating to 1991, exceeding the previous one-day high of ¥6.28 trillion on April 30. Japan also spent ¥5.55 trillion on July 31 and ¥1.87 trillion on Aug. 3, making the episode the country’s largest yen-buying intervention. The United States sold euros for yen during the July 31 operation, marking the first coordinated intervention by Japan and the U.S. to strengthen the yen since 1998. Japanese Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent confirmed the cooperation, while Bessent supported Tokyo’s efforts to counter what he described as the yen’s undervaluation. The yen had weakened to nearly 164 per dollar, its lowest level in 40 years, when Japan returned to the market on July 30. The BOJ raised its benchmark rate to 1.25% in September, and another increase was anticipated before year-end, with the central bank identifying the weak yen as an important factor in its economic and inflation outlook. Demand for safe-haven bonds also weakened as global equities recovered from an AI-related selloff linked to concerns about tighter regulation following the Democrats’ decisive U.S. midterm-election victory. Expectations that Democrats would seek a swift resolution to the conflict with Iran potentially weighed on oil prices and inflation pressures.