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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

#81

Post by quickthrowman »

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

> https://ticdata.treasury.gov/resource-center/data-chart-cent...

Look at the very first row, Japan is the single largest holder of US Treasuries. Why did you post this false claim? Please do better.

Re: US Treasury undertakes historic intervention in yen market

#82

Post by estearum »

phil21 wrote: post #77
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.

Yes but this administration was essentially elected on the idea that they can be horrible people and do horrible things because they will not kick the can down the road, and biting the bullet on these problems is worth the litany of abuses of our nation and our allies.

Turns out it's just the worst of both worlds.

Higher debt, more foreign intervention, slower growth, higher inflation, and our upper echelons occupied by people with no semblance of, or even gesture toward, personal character.

Re: US Treasury undertakes historic intervention in yen market

#83

Post by bsaul »

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.

"was considering a mass sell off to raise cash to defend the Yen."

How would that have worked ? Selling US bonds in exchange for yens, to diminish the amount of yen in the economy, and pump up its price ?

Re: US Treasury undertakes historic intervention in yen market

#84

Post by mitthrowaway2 »

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…

> Japan would then have a whole bunch of non-interest-bearing US dollars

They would not be holding the dollars long enough for the interest to matter. Those would instantly be traded for JPY, weakening the dollar and strengthening the yen, because the goal is to influence the exchange rate.

Re: US Treasury undertakes historic intervention in yen market

#85

Post by wbl »

doctorpangloss wrote: post #72
jordanb wrote: post #70

Earlier quoted context omitted.

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…

They don't invest in Japanese companies because Japan is horrific for corporate governance. Huge cash holdings, cross investments, etc.

Re: US Treasury undertakes historic intervention in yen market

#86

Post by lazide »

estearum wrote: post #82
phil21 wrote: post #77

Earlier quoted context omitted.

> 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.

Yes but this administration was essentially elected on the idea that they can be horrible people and do horrible things because they will not kick the can down the road, and biting the bullet on these problems is worth the litany of abuses of our nation and our allies. Turns out it's just the worst of both worlds. Higher debt, more foreign intervention, slower growth, higher inflation, and our upper echelons occupied…

Anyone who thought the admin was anything but conmen deserves what they get.

The sad part is everyone else they’re going to take with them.

Re: US Treasury undertakes historic intervention in yen market

#87

Post by azernik »

bsaul wrote: post #83
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.

"was considering a mass sell off to raise cash to defend the Yen." How would that have worked ? Selling US bonds in exchange for yens, to diminish the amount of yen in the economy, and pump up its price ?

It's about propping up the yen in foreign exchange terms, so the essential operation is buying yen with dollars to increase the price of the former in a standard microeconomics way.

US bonds happen to be the assumed-safe sink where central banks store their dollars for this eventuality.

Re: US Treasury undertakes historic intervention in yen market

#88

Post by sheeshkebab »

bsaul wrote: post #83
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.

"was considering a mass sell off to raise cash to defend the Yen." How would that have worked ? Selling US bonds in exchange for yens, to diminish the amount of yen in the economy, and pump up its price ?

Treasuries are $ denominated -> sell them for $$, buy yen back, yen/usd drops. or have Uncle Sam buy yen.

Re: US Treasury undertakes historic intervention in yen market

#89

Post by worldthruword »

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.

To see the steelman position explained properly, I would suggest to follow macro guy Luke Gromen both on twitter and on YouTube.

Re: US Treasury undertakes historic intervention in yen market

#90

Post by worldthruword »

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.

I think Peter Schiff has been beating the drumbeats of collapse since 2008. But now on the other hand, we have a rising power China trying overthrow the current system which will accelerate the process. China wasn't in that position in 2008.
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