With the S&P 500 up nearly 4 per cent in two days, commodities prices firming, better-than-expected economic data, and core bond prices under pressure, some analysts are (already) seeing a rebound in risk appetite. Indeed, if US non-farm payrolls data for August â due later on Friday â reassure markets, as expected, the risk bulls will probably come out in full force. All the more curious, then, that the âsafe-haven currencyâ, the yen, is still riding strong, down from last weekâs 15-year highs of nearly Y83 to the dollar but still hovering around Y84.38 â despite Japanâs latest political turmoil, constant threats of currency intervention by officials and lacklustre economic data. Indeed, with the battle for leadership of the ruling DPJ party to be decided in a September 14 party vote, there is a real prospect that Ichiro Ozawa, challenger to prime minister Naoto Kan, will be able to make good on his pledge to intervene to curb the yen. The prospect has undoubtedly boosted the rush of Japanese investment in overseas assets, as yield-hungry investors move to take advantage of the strong yen. For example, as Bloomberg reports on Friday: Japanese investors are scooping up record amounts of bonds sold by the World Bank and state-backed lenders, seeking higher returns as government debt yields tumble. Kokusai Global Sovereign Open, Asiaâs biggest bond fund, boosted holdings of such securities, known as supranational bonds, to 8.2 percent of its portfolio, the most ever. Mitsubishi UFJ Asset Management Co. started four funds that invest in the debt and Diam Co. is attracting record amounts earmarked for the notes. Japanese investors bought an unprecedented 2.18 trillion yen ($25.8 billion) net amount of overseas debt in the week ended Aug. 13. http://ftalphaville.ft.com/blog/2010/09/03/333786/the-politics-of-yen-intervention/