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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 da
by eigenspace 2mo ago
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.
- HumblyTossed 2mo ago[flagged]
- eigenspace 2mo agoEven if he was, it's not like he could control the rampaging elephant in the room.
- inigyou 2mo 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 2mo ago[deleted]
- timr 2mo 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 2mo agoIt is not completely but part of the reason Japan wants to defend it's currency is inflation because of increase in energy prices.
- timr 2mo agoIn the sense that weak currency makes everything you buy from foreign partners more expensive, sure. The place where you go wrong is drawing a straight line to the US actions in Iran. They’re not directly connected.
- lazide 2mo agoOil is a major thing that requires foreign currency to buy, as Japan has no meaningful oil reserves
- rayiner 2mo agoThe 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.
- koito17 2mo agoThe 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.
- hn_throwaway_99 2mo ago
- dredmorbius 2mo agoInvestor fears about rising oil prices and how Japan’s Prime Minister Sanae Takaichi can afford her fiscal stimulus plans recently pushed the yen towards 40-year lows From TFA.
- timr 2mo agoThat line is worth exactly as much as the daily financial news quote “explaining” why the stock market wiggled in a particular direction yesterday. All of those things have some impact on “investors” thinking at all times. They do not uniquely explain the current events. Japan has been defending the yen like this since at least 2022.
- crypttales 2mo ago[dead]
- dosisking 2mo ago> 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
- timr 2mo agoThe BOJ had about $1.1 trillion in US Treasuries as of the beginning of the year.
- quickthrowman 2mo ago> https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html 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.
- blitzar 2mo ago> kick that can down the road With two left feet and a couple of swings and misses, the can isnt in much danger.
- inigyou 2mo agoYou think the US collapse is going to happen right now despite this action?
- blitzar 2mo agoYou think they saved the human race by selling some EURJPY on Friday?
- inigyou 2mo agoImpossible to know. The US sits on the precipice of a bond interest death spiral.
- cindyllm 2mo ago[dead]
- mono442 2mo agothe fed can bring the bond yields down, it's not really a problem
- inigyou 2mo agoHow will the fed do that? What will the side effects be? Why didn't it do that at the latest FOMC?
- mono442 2mo agoQe, yield curve control or possibly other market operations. There won't be any real consequences, it's just an asset swap. They buy bonds and in turn create new interbank reserves.
- jordanb 2mo agoThis 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.
- doctorpangloss 2mo agoIt'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.
- phil21 2mo ago> 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.
- estearum 2mo agoYes 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.
- lazide 2mo agoAnyone 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.
- btown 2mo ago> deserves what they get American voters exist in an environment of propaganda addiction, with every piece of their personal technology reinforcing and profiting from said addiction, that has never existed before. I have great empathy and understanding for those who are bombarded by voices that are actively manipulating them for engagement, and I believe this empathy is key to understanding if, and how, a landscape of echo chambers can nonetheless result in a sustainable and balanced future. (edit: see below for my response about the limits of this)
- SpicyLemonZest 2mo agoUnderstanding, absolutely. None of us are immune from propaganda, and most of us have at one time or another been swayed by selective arguments and echo chambers to behave poorly. I don’t like that you have empathy for people who are right this second steering the government in a project of performative cruelty against me. I think you should withhold your empathy until they’ve been stopped and appropriately punished for their misdeeds.
- bsaul 2mo ago"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 ?
- azernik 2mo agoIt'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.
- sheeshkebab 2mo agoTreasuries are $ denominated -> sell them for $$, buy yen back, yen/usd drops. or have Uncle Sam buy yen.
- Eddy_Viscosity2 2mo agoCurrency interventions never work. They buy a bit of time maybe, but without any fixes to the underlying causes that made the intervention necessary, its a temporary solution.
- CraigJPerry 2mo ago>> Currency interventions never work Where did you learn that? It doesn't reflect the structural volumes present. Central banks make interventions all the time in line with little stabilisation programs. Those are almost always deemed success. Maybe you deduced it by yourself? If so, fx is weird despite traditionally being seen as the simplest area in finance. E.g. It's counter-intuitive but we tend to think trade make up most FX volume globally. It's in the area of less than 3%. The majority by far is speculative and hedging. The other trap is fx volume, people assume the know what volume is but then they learn expressions of fx volume is almost always actually tick volume.
- deleted 2mo ago[deleted]
- renegade-otter 2mo agoIt's kind of ironic how Stephen Miran's strategy of "to hell with the rest of the world, we do what we want" keeps running into electric fences. They want to devalue and inflate the dollar, but the Horse in the Hospital keeps ruining the plan.
- duxup 2mo agoIt’s all just a bunch of childish short term thinking. Granted this administration doesn’t care as long as they get theirs. They just blame anyone else as things come and go.
- kilroy123 2mo agoYup, I call it a cartoonish view of the world. I think so many in power now, including lots of people in tech, have bonkers, cartoonish views of the world that just don't map to the reality and complexities of the 21st century. Scary stuff.