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USD/JPY Intermarket Analysis: US-Japan 10-yr yield spread hits 9-month low

USD/JPY's corrective bounce to 109.00 could be short-lived as the yield differential continues to slide in favor of the Japanese yen.

The spread between the 10-year US treasury yields and its Japanese counterpart fell to 268 basis points (bps) soon before press time - the lowest level since Apr. 2, 2018.

Moreover, the spread may continue to drop further, courtesy of dovish Fed expectations and extended risk aversion in the equities.

Yield spread

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