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US Treasury undertakes historic intervention in yen market

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Re: US Treasury undertakes historic intervention in yen market

#61

Post by adabyron »

jmyeet wrote: post #42

Not to repeat myself, but I'll point to earlier comments about what's going on with interest rates [1]. For some context here, it's worth mentioning the Yen carry trade [2]. This is actually relevant because it allegedly underpins the AI investment boom [3] and the Yen appreciating is a real problem for investors who borrowed Yen to invest, particularly if it's into a bubble that may well pop. It's a double shammy. I…

Good reminder that exactly this time last year we had a big blow up that was short lived and blamed on the yen carry trade.

Re: US Treasury undertakes historic intervention in yen market

#62

Post by adabyron »

Schiendelman wrote: post #52
bilsbie wrote: post #10

Can anyone steel man the “this isn’t a big deal” side of this? On x and reddit all I see are sky is falling posts.

Hold on there. The reason you mostly see sky is falling posts is that those get more engagement , both positive and negative. "Everything is fine" doesn't cause a reaction in a reader. This is inherent to social media. It's bad for us, too, because it eventually tricks our brain into thinking the sky is always falling, no matter how we try to talk ourselves out of it.

Curious what others think. In my small real offline world, it seems this has caused people to get worked up about the sky falling a few times and then quit paying any attention to the sky or boy crying wolf at all.

Which means when events actually happen that will have a large negative impact on their life or their descendants, they just don't care. Which then results in another metaphor - boiling a frog.

Re: US Treasury undertakes historic intervention in yen market

#64

Post by dosisking »

timr wrote: post #36
inigyou wrote: post #24

Earlier quoted context omitted.

Japan has to sell off its bonds to get dollars to buy oil with since oil is so expensive. I wonder why that happened.

No. That has nothing to do with this. Setting aside the obvious fact that the BOJ does not buy oil, they’ve been engaged in a (futile) currency defense scheme since long before the Iran conflict. This is purely about the interest rate spread.

> Setting aside the obvious fact that the BOJ does not buy oil

I guess you are not aware that it is the Japanese corporations and not the BOJ that hold the US bonds

Re: US Treasury undertakes historic intervention in yen market

#65

Post by rayiner »

xbmcuser wrote: post #45
timr wrote: post #36

Earlier quoted context omitted.

No. That has nothing to do with this. Setting aside the obvious fact that the BOJ does not buy oil, they’ve been engaged in a (futile) currency defense scheme since long before the Iran conflict. This is purely about the interest rate spread.

It is not completely but part of the reason Japan wants to defend it's currency is inflation because of increase in energy prices.

The devaluation of the Yen against the dollar (from the typical 110:1 to these days 150:1) started around 2021 and has been a source of angst in Japan for quite some time. People were complaining about it constantly when I was last in Tokyo in December 2025, when oil was at $70/barrel.

Re: US Treasury undertakes historic intervention in yen market

#67

Post by dartharva »

dzonga wrote: post #6

Japan is the sort of canary in the coal mine. so yeah if the yen pops - then the u.s will too given all the 'a.i' shenanigans & the market manipulation with oil. but I guess the US Treasurer is willing to manipulate the market till they can't.

Can you elaborate?

Re: US Treasury undertakes historic intervention in yen market

#68

Post by timr »

dosisking wrote: post #64
timr wrote: post #36

Earlier quoted context omitted.

No. That has nothing to do with this. Setting aside the obvious fact that the BOJ does not buy oil, they’ve been engaged in a (futile) currency defense scheme since long before the Iran conflict. This is purely about the interest rate spread.

> Setting aside the obvious fact that the BOJ does not buy oil I guess you are not aware that it is the Japanese corporations and not the BOJ that hold the US bonds

The BOJ had about $1.1 trillion in US Treasuries as of the beginning of the year.

Re: US Treasury undertakes historic intervention in yen market

#69

Post by dcrazy »

sph wrote: post #9
deadbabe wrote: post #8

Earlier quoted context omitted.

If you can manipulate the market why not do it? Literally no one benefits from the alternative.

Manipulation of the market never comes for free. You just delay, and render unpredictable, the eventual reckoning, for short-term benefits. It will be interesting to see who’s gonna blame the free market when that day arrives.

Manipulating the market is literally the job of both the Treasury and the FOMC. It’s how we enact monetary policy.

Re: US Treasury undertakes historic intervention in yen market

#70

Post by jordanb »

eigenspace wrote: post #5

Japan holds a huge amount of US treasuries, and I guess was considering a mass sell off to raise cash to defend the Yen. US treasury bond yields are already dangerously high for the US and Japan selling treasuries would push yields up even higher, and could trigger more panic selling from others. I guess this is Bessent's scheme to try and kick that can down the road.

This would be a dumb move. If Japan's treasury started selling a large amount of US debt, the Fed could buy it up and pay interest to itself.

Japan would then have a whole bunch of non-interest-bearing US dollars and the Fed would have a lot of interest-bearing US bonds.

Now it's true that Japan's treasury could then use those dollars to buy something else like stock in US companies but they could have done that all along anyway. They bought the debt for the coupon payments.

What's actually happening here is what it looks like: Japan's economy is starting to seize up due to the Iran war. Since they have to import all their oil they're suffering from a currency crisis (they can't export enough to balance payments on their oil bills). The US is stepping in to support them because 1) Japan's current government is allied politically with Trump and 2) Japan's an important geopolitical ally that is being hit very hard by the Iran war.

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