Australia's second-largest pension fund contrarian bet on the yen: Continuously buying near 160, while reducing its US Treasury holdings

BlockBeats News, August 26th. Australia's second-largest pension fund, the Australian Retirement Trust (ART), is betting against the trend on the Japanese Yen. Managing around 370 billion Australian dollars (approximately $265 billion) in assets, ART has been increasing its holdings of the Yen over the past six months. The Yen overweight position has reached a multi-year high, and additional buying occurred as the Yen approached 160 against the Dollar, with some funds coming from reducing Dollar exposure.

ART's Senior Portfolio Manager, Jimmy Louca, stated that the market may have overestimated the impact of energy prices on the Yen but underestimated the possibility of a rate hike by the Bank of Japan. Current rate derivatives indicate an 80% probability of a rate hike by the Bank of Japan in September, with a near full pricing for an October hike. A Reuters survey shows that 57% of economists expect the Bank of Japan to raise rates to 1.25% in September.

At the same time, ART is currently underweight U.S. Treasuries by approximately 0.5 percentage points. The reasons include U.S. inflation still above target, the economy showing resilience, and the AI investment boom clashing with government capital pursuits. Louca forecasts that the 30-year Treasury yield could rise further to 5.5%.