Selling the yen on the assumption that Abenomics will work is all well and good. Maybe prime minister Shinzo Abe will succeed in snapping decades of deflation. Maybe the dollar really is, as UBS UBSN.VX -2.73% and others believe, heading to Y110 against the yen.
But there’s a glitch.
Today, if you haven’t noticed, is a pretty darn stressful day. Emerging-market currencies, for example, are getting flayed.
The trigger is a rise in U.S. Treasury bond yields. Now, sometimes, that drags the dollar higher against the yen, just like Abenomics does. It’s certainly dragging the dollar higher against a lot of other currencies. But today, the push higher in the yen, driven by fear that the withdrawal of Fed bond buying could all end horribly, is the greater force. (The Swiss franc, another retreat in shaky times, is also on the up.)
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