BlockBeats report: On August 26, Australia’s second-largest pension fund, the Australian Retirement Trust (ART), is making a contrarian bet on the Japanese yen. Over the past six months, ART—which manages approximately A$370 billion (about $265 billion USD)—has consistently increased its yen holdings, with its overweight position in the yen reaching multi-year highs. It added to its yen position as the USD/JPY exchange rate neared 160, with some funding coming from reduced exposure to the U.S. dollar.
ART Senior Portfolio Manager Jimmy Louca said the market may have overestimated the downward pressure on the yen from energy prices, while underestimating the likelihood of a Bank of Japan rate hike. Current interest rate swaps indicate an approximately 80% probability of a BoJ rate hike in September, with a hike in October already fully priced in by the market. A Reuters survey found that 57% of economists expect the Bank of Japan to raise rates to 1.25% in September.
Meanwhile, ART is currently underweight U.S. Treasuries by approximately 0.5 percentage points, citing reasons such as persistently high U.S. inflation above target, economic resilience, and competition for capital from AI investment热潮 and government spending. Louca expects the 30-year U.S. Treasury yield to rise further toward 5.5%.