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The Yen-Yuan Rate And U.S. Notes
The strengthening of the Chinese yuan against the Japanese yen removes one incentive for the Bank of Japan to sell yen and buy dollars. The decline in U.S. long-term rates in the face of a narrower yen carry since the May withdrawal of liquidity by the Bank of Japan occurred while the yen weakened vis-a-vis the yuan. A cessation of such weakening is a concern for U.S. bonds.