Tech stock sell-off drives safe haven demand, yen rises to highest level in over a month

(1) As the sell-off in tech stocks intensifies, investors are turning to traditional safe-haven assets such as the yen, Japanese government bonds, and US Treasury bonds, driving the yen to further strengthen and reach its highest level in over a month. (2) After several weeks of narrow fluctuations, the yen broke out against the US dollar in the past 24 hours, currently rebounding to its highest level since September 18 (the day the Bank of Japan raised interest rates); during Friday’s Tokyo trading session, the yen at one point rose 0.4% to 156.08 against the US dollar, following a 0.9% gain on Thursday. (3) Due to continued outflows from tech stocks, Asian equities tracked Wall Street lower; Japan’s benchmark 10-year government bond prices surged, with yields dropping by 10 basis points, while US Treasuries largely held on to Thursday’s gains. (4) Carol Kong, strategist at Commonwealth Bank of Australia, stated that as a safe-haven asset, the yen is now more favored than the US dollar; this week’s earnings reports from major US tech companies have triggered doubts in the market about the “AI-driven US growth narrative.” She added that if the unwinding of tech stock positions intensifies further, the yen may continue to strengthen against the US dollar.