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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

#71

Post by koito17 »

rayiner wrote: post #65
xbmcuser wrote: post #45

Earlier quoted context omitted.

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.

The devaluation didn't really get out of control until 2022 IME.

In 2021 you were still able to divide by 100 and not be far off in conversion. Typically traded between 105 ~ 115.

Nowadays the Yen is so weak that I unconditionally convert my whole paycheck to USD after paying rent. Even if risk-free interest rates between Japan and United States converge, there's just not much reason to hold Yen if you want to avoid losing purchasing power to inflation.

e.g. I can risk money in NTT stock for a meager 3.0% dividend yield. Or I can convert to USD and keep the cash in my brokerage account, where it earns 3.4% interest. If I want to raise the risk to similar levels as the NTT stock, I would be looking at utility company ETFs yielding up to 7% for the past few years. Of course, there is foreign exchange risk (e.g. 10% move down in USD/JPY and a year's worth of carry trade gains are eliminated). But if the fundamentals were there for a stronger Yen, then intervention wouldn't be necessary. So for now I'm exposing myself to FX risk for the chance at getting marginally better wealth preservation.

Re: US Treasury undertakes historic intervention in yen market

#72

Post by doctorpangloss »

jordanb wrote: post #70
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…

It's a big world. There are a lot of places to buy oil from. And the balance of payments is not that complicated with energy - like where do Middle East OPEC members reinvest their dollars? In world assets. Like Japanese companies.

IMO, the far more impactful geopolitical conflict is still the war in Ukraine, between two countries with allies that actually have deep ties to the rest of the world, with casualty counts exceeding a million people.

But nonetheless the problems there, in Japan, are the same that generations of Japanese have already identified as a big problem, predating the fall of Bretton Woods or whatever modern top down policies: the patriarchy, nepotism and xenophobia... Many similar problems to the West. You cannot bank or math your way out of a suffocating patriarchy, which is to say, the humanities people have always had a bigger impact on our day to day lives than the people crunching for Jane Street interviews.

Re: US Treasury undertakes historic intervention in yen market

#73

Post by rcMgD2BwE72F »

eszed wrote: post #57
Aboutplants wrote: post #39

Earlier quoted context omitted.

Which is hilarious because 5-10 billion dollars worth of Yen is not going to do much in the grand scheme of things. It’s a speed bump not a stop sign.

I believe that would mean 5- year or 10- year , as in the terms of the bonds. No amount disclosed.

Yet the photo in Reuters article reads "bil."

Re: US Treasury undertakes historic intervention in yen market

#74

Post by [deleted] »

eigenspace wrote: post #7
horsey_face wrote: post #3

Doesn't mention that the Japanese would have sold US govt bonds to prop up the yen. But selling euros might force the Europeans to do just that to pro up the euro if need be. Is that a reasonable reading of things?

Euro countries hold even more US bonds than Japan does, and could sell those if they need to. But the EU probably wont do that for monetary reasons. First, the EU doesnt really mind too much if the Euro drops in value a bit since it somewhat helps domestic industry. Second, the Euro seems to have strengthed against the dollar, not weakened since this was done. I think if there was a coordinated selling off of US trea…

[deleted]

Re: US Treasury undertakes historic intervention in yen market

#75

Post by yed »

eszed wrote: post #57
Aboutplants wrote: post #39

Earlier quoted context omitted.

Which is hilarious because 5-10 billion dollars worth of Yen is not going to do much in the grand scheme of things. It’s a speed bump not a stop sign.

I believe that would mean 5- year or 10- year , as in the terms of the bonds. No amount disclosed.

In the note it was written as “$5 - 10 bil”

Re: US Treasury undertakes historic intervention in yen market

#76

Post by vajrabum »

throwaway132448 wrote: post #12
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.

> Literally no one benefits from the alternative. Future you might disagree with present you. But even if we disregard time, I think millions of consumers would benefit from the opportunity to have competitive markets again. If an actual economic forest fire was allowed to burn, we might eliminate some of the too-big-to-fail corruption and oligopoly that is the norm now and provide space for new seeds to grow.

The problem with this idea which is common in some circles is that most of the businesses involved are commodity or lowish margin. They likely got built either with government support or before the current margin's were a thing. Becdause you can't make a high enough ROI on building a new competitor your seeds will likely die in barren soil never having germinated. In today's markets the likely result will be increased business going to China, India, Vietnam and the like. If you're talking about banking then the worst possible scenario at a national level is that you're borrowing money denominated in a foreign currency. The adventure after 1929 was a result of deliberate policy to liquidate and let it burn.

Re: US Treasury undertakes historic intervention in yen market

#77

Post by phil21 »

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.

> I guess this is Bessent's scheme to try and kick that can down the road.

This can be summed up policy for pretty much every single administration since I've been alive. For almost every single massively looming problem - financial, domestic, and foreign policy. Various degrees of can kicking I suppose, but the can shall be kicked regardless.

Re: US Treasury undertakes historic intervention in yen market

#78

Post by bryanlarsen »

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.

The sky has been falling for the Yen for about thirty years now. At this point it feels like the boy who cried wolf.

Re: US Treasury undertakes historic intervention in yen market

#80

Post by [deleted] »

eszed wrote: post #57
Aboutplants wrote: post #39

Earlier quoted context omitted.

Which is hilarious because 5-10 billion dollars worth of Yen is not going to do much in the grand scheme of things. It’s a speed bump not a stop sign.

I believe that would mean 5- year or 10- year , as in the terms of the bonds. No amount disclosed.

[deleted]
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