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US Treasury undertakes historic intervention in yen market
- rib3ye 3mo agohttps://archive.is/lAaaZ https://archive.is/lAaaZ
- willmadden 3mo agoThank you.
- horsey_face 3mo agoDoesn'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?
- jurgenburgen 3mo agoI don’t think the ECB would intervene, a lower euro is not a panacea but helps local industry compete with Chinese industry.
- eigenspace 3mo agoEuro 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 treasuries by Euro countries, it'd be to force a political concession from the USA, not to defend the Euro's value.
- deleted 3mo ago[deleted]
- eigenspace 3mo agoJapan 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.
- HumblyTossed 3mo ago[flagged]
- eigenspace 3mo agoEven if he was, it's not like he could control the rampaging elephant in the room.
- inigyou 3mo agoJapan has to sell off its bonds to get dollars to buy oil with since oil is so expensive. I wonder why that happened.
- deleted 3mo ago[deleted]
- timr 3mo agoNo. 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.
- xbmcuser 3mo agoIt is not completely but part of the reason Japan wants to defend it's currency is inflation because of increase in energy prices.
- dzonga 3mo agoJapan 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.
- deadbabe 3mo agoIf you can manipulate the market why not do it? Literally no one benefits from the alternative.
- sph 3mo agoManipulation 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.
- Supermancho 3mo ago> You just delay, and render unpredictable, the eventual reckoning, for short-term benefits. After a century, those short-term benefits add up to a long term benefit.
- uncivilized 3mo agoYou plan on being here for over a century?
- dcrazy 3mo agoManipulating the market is literally the job of both the Treasury and the FOMC. It’s how we enact monetary policy.
- throwaway132448 3mo ago> 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.
- bilsbie 3mo agoCan 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.
- halJordan 3mo agoWhy would the sky be falling? Getting the world's largest economy to prop up your own economy is kind of the point to being an ally of the biggest economy in the world; the Japanese and American governments being in bed together and planning the Japanese economy is not just normal, but is one of the bigger conspiracy theories persisting from the 1980s when US intervention is blamed as the reason Japan's economy stagnated in the 90s. So I don't understand why this would be a sky is falling moment.
- inigyou 3mo agoBecause then the world's largest economy suddenly needs to de-lever to afford the oil you made more expensive. The USA government will enter a debt-interest spiral if Japan sells its bonds. There will be no recovery from that besides, maybe, hyperinflation through printing away the debt.
- Supermancho 3mo ago> The USA government will enter a debt-interest spiral if Japan sells its bonds. Regardless if they sell all their bonds this second or not, the US spiral is a foregone conclusion.
- inigyou 3mo agoIf Japan sells all its bonds, it happens right now.
- actionfromafar 3mo agoYes, it has to wait until after November.
- glass1122 3mo ago[dead]
- olalonde 3mo agoThis has to be the first time I've seen a graph with an inverted scale.
- braingravy 3mo agoYeah… what was the point of that?
- credit_guy 3mo agoWeak yen is low, strong yen is high.
- inigyou 3mo agoPaywalled
- malfist 3mo ago[flagged]
- CamelCaseName 3mo agoWait, no way! Someone posted a zoomed up photo of a US official (can't recall who) of a notepad a few days ago saying "To do: Buy Yen 5Y - 10Y" or something similar
- IAmGraydon 3mo agoBessent wrote that note very large and intentionally left it visible in hopes that it would be photographed and the market would do the work for him. If the market believes the US Government is going to spend $10B on JPY, it will happily price it right in without the US having to spend a penny.
- phatfish 3mo agoIt does have an air of Austin Powers about it. Dr Evil's notepad in his evil lair. "To Do: Kill Austin Powers tomorrow!"
- ifwinterco 3mo agoThese guys never do anything by accident, like when Jamie Dimon said "I probably shouldn't say this, but if you see one cockroach there's probably more". You don't get to manoeuvre yourself to being the head of JP Morgan by starting sentences with "I probably shouldn't say this" in interviews and then saying something you actually think you shouldn't say
- Aboutplants 3mo agoWhich 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.
- heisenbit 3mo agoPropping up the yen may be more helpful for the US than if Japan hikes interest rates which is on the table (Google ’bring money home‘). The carry trade buying treasuries with debts incurred in yen has been a steady source for US funding. Eventually it will happen with collateral impact on treasury rates but this ‚supportive‘ move may just shift it past November.
- timr 3mo agoYes. Let’s not forget that the last time the BOJ hinted at rate normalization, it caused a global bond market freakout, a spike in Treasury rates, and a collapse in Asian stocks (the “BOJ Shock” of December 22). One can make a reasonable story that this led to the SVB collapse.
- mono442 3mo agoThe svb collapsed because they bought a lot of long term bonds during zero interest rate policy. It was inevitable.
- downrightmike 2mo agoUS is only buying because Japan put out a mandate to repatriate all global Yen, so Japan has been selling off US notes to do just that.
- jmyeet 3mo agoNot 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'm wondering if this is going to be another George Soros moment. Soros famously broke the Bank of England who were trying to maintain a rate for the pound [4]. If massive AI investment is fueled on the Yen then there's a pretty big icentive to break the Yen by investors. This administration would normally be on board with that sort of thing (and actively profit from it) so it's not yet clear to me what's going on. [1]: https://news.ycombinator.com/item?id=49119122 https://news.ycombinator.com/item?id=49119122 [2]: https://www.economicshelp.org/blog/glossary/yen-carry-trade/ https://www.economicshelp.org/blog/glossary/yen-carry-trade/ [3]: https://www.businessinsider.com/yen-carry-trade-unwind-stock-market-risk-boj-rates-2026-7 https://www.businessinsider.com/yen-carry-trade-unwind-stock... [4]: https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban...
- adabyron 3mo agoGood reminder that exactly this time last year we had a big blow up that was short lived and blamed on the yen carry trade.
- AnimalMuppet 3mo agoOK, let me restate that, since I had to think about it for a bit to see what you were getting at: The yen carry trade is when you borrow yen (at ~0% interest), convert to dollars, buy assets in dollars, those assets hopefully appreciate, but they don't have to appreciate all that much because you were able to buy them on leverage with no interest. But the other way to win on that trade is if the yen becomes cheaper while you were holding dollar-based assets. So those who are currently in the carry trade (that is, have borrowed yen) would not mind if the yen suddenly became dramatically cheaper. I think that's a longer form of what the parent is saying.
- dredmorbius 3mo agoHistoric, yes. Unprecedented, no. The Treasury’s intervention to bolster the yen is the first since 1998, when it bought the currency in order to strengthen Japan’s economy after the yen had dropped to eight-year lows. The US intervened in Japan’s currency in 2011 to weaken it as part of a co-ordinated international effort to prevent a dangerous currency appreciation after the Tohoku earthquake and tsunami. (From TFA.) The Asian Financial Crisis of the 1990s was one of several that occurred during that decade (also: the recession triggered by the 1st Gulf War 1992, the Mexican Peso crisis of 1994, the Russian financial crisis of 1998, and arguably the post-dot-com bust in 2001, stretching the decade just a tad). For those present at the time, the dot-com boom was a short-lived (though extravagent) interval, beginning in late 1998, spiking early 2000, and crashing out in early 2001. <https://en.wikipedia.org/wiki/1997_Asian_financial_crisis https://en.wikipedia.org/wiki/1997_Asian_financial_crisis>
- fnordpiglet 3mo agoThe start of the dot com boom I would mark at August 1995 when Netscape’s IPO was the most successful IPO to that date. But really I mark it with the IETF RFC 1290 “There’s Gold In Them Thar Networks” in 1991. But yes, the 21st century was defined in 1990’s. Everything since is derivative. I feel sad for those born after everything worth doing had been done already.
- dredmorbius 3mo agoIf you look at NASDAQ and investment trends, it was markedly shorter. I had charts of both up whilst writing my earlier comment. Though yes, I'd agree that NSCP launched the mania.
- bogota 3mo ago[dead]
- deleted 3mo ago[deleted]
- raincole 3mo agoJapan's industries have been squeezed hard by China's rare earth sanction and global energy price. I'm not sure some financial operations can wiggle them out of the situation.
- ProllyInfamous 3mo agoToo. Big. To. Fail. I still have the tab (open from yesterday's /hn/) about Trickle Down Economics working as intended (which it obviously does, from a certain minority of the population's top-of-the-K-curve POV). Honestly, this is a good strategic move for USA lifestyle status quo, given Japan does still hold a massive amount of US bonds / debt obligations (even though in the past decade it has been lessening its exposure to US debt instruments). I believe 2026/2027 is the threshhold where USA interest (on our debt) is the top-line of our fiscal budget. #USA ---- This is not financial advice (I am a semi-retired datacenter ELECTRICIAN, as bluecollar as they come): look at the top marketcaps now verse just a few years ago. Pre-Covid, a $2T$+ marketcap was a rare achievement (i.e. Saudi Aramco... which is sometimes not even Top 10 anymore!): now there are three companies that are solid $4T$+ marketcaps, sometimes flirting into $5T$ (a few days at a time). Inflation is the only answer, from that same top-of-the-K POV. Gotta keep them assets 'tected, ya'll. Or track gold. Artwork. Land. Anything Real, legally speaking (except soon/now: perhaps not SFH housing) #WhateverDawg ---- If you've been saving up for a house: right now you should really check out Michael Bordenaro's recent video on the topic of "Corporate Landlords shedding rental homes" [1] – I have no affiliation other than enjoying his almost-daily audio commentary – he is a former realtor (I went to college he sold houses) and his topics are extremely observant and varried. Michael's self-shot walks helped inspire me to get in better shape (e.g. lose "dead parent" weight, lower BP, &c) and rejoin "the tanktop generation" (he is a bit younger than me, but I never grew up so...). |-30lbs|-12kg~| Save until you can put down at least 20% (to avoid additional insurance fees), because in a-fifth of US states insurance is already going to cost more than property taxes (which is ridiculous)! [recalled from video, below; double-check my aging flesh memorybanks]. One in twelve SFHs are NOT insured, including mine (a rental); I also do not have personal rental insurance, as tenant, because I. do. not. care. #Mom&Pop [1] <https://www.youtube.com/watch?v=0n8trvfUTZs https://www.youtube.com/watch?v=0n8trvfUTZs> spec: 5m40s (for a list of companies net-shedding)
- downrightmike 2mo ago2020, US printed $4 trillion dollars, 20% of all the currency it had ever printed. Then gave it to the richest and the greedy through PPP loans, and they stuffed that into the market. More $1t companies is logical. This isn't too dissimilar from when Spain plundered the new world for gold and silver. Which then inflated their local markets as there were only so many real goods to be bought, otherwise they paid off debt, and came out of that poorer and didn't have money to build ships. They were strong on paper until England challenged them. US was strong on paper until it went after Iran. US is having it's Spain moment right now.