Japan · Scott Bessent · U.S. Treasury · Wall Street · Fortune Technology
Scott Bessent fired a currency bazooka, but global finance still looks like a ‘giant Jenga tower’ propped up by a Japanese yen
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The first U.S.-Japan joint intervention in three decades aimed at boosting the yen has come and gone without doing much to ease anxiety in currency markets.
Key facts
- Treasury Secretary Scott Bessent’s notepad suggested the U.S. bought $5 billion-$10 billion worth of yen, while Japan’s move topped $50 billion
- With a stockpile of more than $1 trillion in Treasuries, Japan is the largest foreign holder of U.S. debt
- But Yardeni pointed out they are in better shape than they were during the 1998 Asian financial crisis, when currencies across the region crashed
- Now traders are watching the ‘yen carry trade,’ where cheap yen borrowing funds bets on higher-yielding assets worldwide, and wondering if it’s about to blow up,” Wall Street veteran Ed Yardeni
Summary
Treasury Secretary Scott Bessent’s notepad suggested the U.S. bought $5 billion-$10 billion worth of yen, while Japan’s move topped $50 billion. To be sure, efforts to prop up the yen were seen as short-term measures to address the symptoms rather than the root causes of the currency’s weakness. But given that the yen’s recent instability was enough to trigger the U.S.-Japan intervention, a key underpinning of global financial markets appears riskier. “Now traders are watching the ‘yen carry trade,’ where cheap yen borrowing funds bets on higher-yielding assets worldwide, and wondering if it’s about to blow up,” Wall Street veteran Ed Yardeni wrote in a note on Tuesday.