(Bloomberg) -- Quant fund AlphaSimplex Group is sticking to its bet against the yen even after the currency rallied back sharply from a one-year low Tuesday, spurring speculation that Japanese officials stepped in to prop up the currency. 

“Today’s move has obviously offset some of our total gain in our short-yen trade, but we are still holding it,” said Kathryn Kaminski, chief research strategist and portfolio manager at AlphaSimplex, whose public mutual fund delivered a gain of nearly 36% last year, thanks to bets against bonds. “Being a trend follower, the interesting thing to us is that overall Japanese officials have been so slow to react. So from our perspective the short-yen trade can continue longer than many people think.”

The yen Tuesday weakened past the key level of 150 to the US dollar. Then it soared as much as nearly 2% in a matter of seconds, rallying to as much as 147.43. 

While that prompted talk that Japanese officials may have swooped in, some analysts said it could have been caused by other factors, like standing orders to buy once it crossed that threshold. 

While Japan intervened in the foreign exchange market late year to prop up the yen, it started tumbling again this year as high US interest rates continued to draw in cash, pushing up the dollar. As a result, Tuesday’s rebound for the yen may only embolden some speculators to pile on bets that the yen will weaken again, with Brown Brothers Harriman strategist Win Thin saying the move was “a gift to dollar bulls.”

Read more: Yen Surges From Weakest Level in a Year Amid Intervention Talk

“It was the same story last year around the same time with a blip of yen strength with officials doing some minor things to support it,” Kaminski said. “But then they backed off and our short yen trade went on to become profitable again. We expect the same kind of scenario this time around.”

The $2.7 billion Virtus AlphaSimplex Managed Futures Strategy Fund is down about 2.9% so far this year, according to data compiled by Bloomberg. But Kaminski said that’s just a temporary setback since she expects bets against the yen and US Treasuries pay off.

The dollar has gained sharply against currencies like the yen since July as the selloff in Treasuries pushes yields higher, giving investors a strong incentive to shift money to the US. On Tuesday, US yields continued to advance, spurred by an unexpected jump in job openings and growing conviction that the Federal Reserve is poised to keep rates elevated through next year. 

“Everything is happening now – with people finally realizing it’s higher-for-longer for rates and that there’s just so much Treasury supply coming — so we have to have higher yields,” Kaminski said. “For us, with the yield-curve still being inverted, the short bonds signals continue to work. So the trend remains short bonds.”

Read more: Bostic Says Fed Should Hold Rates High ‘For a Long Time’ (4)

--With assistance from Carter Johnson.

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