U.S. Treasury expands bond buybacks, yields fall; Nikkei rebounds after 3-day decline

U.S. Treasury more than doubles bond buyback limit to curb long-term yield rise On the 19th, the U.S. Treasury announced plans to expand the per-operation buyback cap for long-term bonds (10-30 years) to at least $4 billion (approximately 630 billion yen), more than doubling the previous limit. The move aims to curb the rise in long-term yields driven by inflation concerns from higher oil prices, and market participants are increasingly referring to it as a 'Bessent put.' 123

Nikkei rises 890 points; oversold stocks bought back as yields fall In the Tokyo stock market on the 20th, the Nikkei average rebounded for the first time in three days, closing at 66,216, up 890 points from the previous day. The decline in long-term yields following the U.S. Treasury's expanded bond buybacks was well received, and buybacks were dominant, especially in semiconductor and AI-related stocks that had fallen sharply in the previous sessions. 456

July exports rise 23.2%, highest growth since 2022 on semiconductors and weak yen According to the trade statistics for July released by the Ministry of Finance on the 20th, exports rose 23.2% year-on-year, the highest growth since October 2022. Exports of semiconductor manufacturing equipment surged 49.1%, with shipments to China up 25.8% and to the U.S. up 22%. Meanwhile, imports also grew 27.8%, resulting in a trade deficit of 634.5 billion yen, marking the third consecutive month of deficit. 78

Yen rises to mid-158 range; long-term yields fall to 2.83% In the Tokyo foreign exchange market on the 20th, the yen strengthened to the mid-158 range against the dollar. Following the U.S. Treasury's announcement of expanded bond buybacks, U.S. long-term yields declined, and yen buying/dollar selling became dominant as investors focused on the narrowing interest rate differential between Japan and the U.S. Japan's long-term yield also temporarily fell to 2.830%. 91011

Hitachi to book 179.9 billion yen special gain from sale of Hitachi Construction Machinery shares Hitachi announced on the 19th that it will record a special gain of 179.9 billion yen from the sale of investment securities in its standalone financial statements for the fiscal year ending March 2027, following the sale of its shares in Hitachi Construction Machinery. The move is aimed at reducing cross-shareholdings, and the company stated there will be no impact on consolidated results. 12

PPIH forecasts higher revenue and profit for fiscal year ending June 2026; net profit up 21.6% to 110 billion yen Pan Pacific International Holdings announced its financial results for the fiscal year ending June 2026, with revenue up 8.8% year-on-year to 2.4452 trillion yen and net profit up 21.6% to 110 billion yen. Duty-free sales reached a record high, and operating profit in North America and Asia also grew significantly. 13