After the U.S. and Japan jointly intervened to buy yen, $USD/JPY (USDJPY.FX)$ it briefly dropped from above 163 to around 155. How does foreign exchange affect U.S. equities? Simply put, in the past, many investors borrowed low-yielding yen to invest in U.S. stocks and Treasuries; now that the yen has suddenly strengthened, those loans have become more expensive to repay, prompting some investors to sell part of their equity holdings and reduce exposure—highly valued tech stocks are often hit first. On the other hand, if Japan sells large amounts of U.S. Treasuries to fund yen purchases, it could push Treasury yields higher and compress valuations for growth stocks. Fortunately, the U.S. is pushing a mechanism allowing Japan to use its U.S. Treasury holdings as collateral to obtain dollars, alleviating this concern. Could the yen’s sharp rally trigger portfolio rebalancing out of U.S. equities? Would you prioritize defensive positioning in the Nasdaq, or focus on stocks that benefit from a weaker dollar?