Japan's rising yields test US Treasury demand as Bessent weighs FIMA expansion

September 3, 2026 at 03:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Japanese investors sold a net $71 billion of US government debt through June, with almost all of it in short-term Treasury bills. US Treasury Secretary Scott Bessent is urging the Federal Reserve to expand the FIMA repo facility after Japan said it plans to use it following the July 31 joint intervention. The shift comes as Japan's 10-year government bond yield trades around 3% for the first time since 1996.

Key Facts

Japan-based investors sold a net $71 billion of US government debt through June, including about $69 billion in short-term Treasury bills.
Japan's 10-year government bond yield is around 3% for the first time since 1996.
The US 30-year Treasury yield has climbed back toward its highest level since 2007.
Japan said it plans to use the Fed's FIMA repo facility after the July 31 joint intervention to support the yen.
Treasury Secretary Scott Bessent urged the Federal Reserve to make the FIMA facility bigger.

Japanese Yield Shift

Japan's 10-year government bond yield is around 3% for the first time since 1996. For decades, Japan's ultra-low rates pushed its pensions, insurers, and other big investors overseas in search of better returns, making them major buyers of US and other foreign bonds. Now that Japanese bonds pay significantly more, some of that money has an incentive to come home, reducing a source of demand the US has long counted on.

US Treasury Pressure

Japan-based investors sold a net $71 billion of US government debt through June, according to Treasury data. Almost all of it — about $69 billion — came from short-term Treasury bills, which mature within a year. Net sales of longer-term notes and bonds were only $3 billion. Long-term yields are the ones more closely tied to mortgages, corporate borrowing costs, and stock valuations.

FIMA Facility Role

The pandemic-era FIMA repo facility gives Japan another way to get dollars by temporarily exchanging Treasurys with the Fed for cash rather than selling them into the market. That became more than theoretical after the US and Japan jointly intervened to support the yen on July 31. Japan said afterward that it plans to use FIMA in the future, and Bessent urged the Fed to make the facility bigger.