The BoJ has to raise rates. Dumping Dollars to buy Yen is spitting in the wind.
If you raise JPY rates, then these U.S. treasuries are going to get liquidated driving up U.S. rates and of course the U.S. doesn't like that.
So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
This is undoubtedly why Bessent bought $5 to $10 billion JPY using Euro awhile back (as rumored, the exact amount is a secret). That way he could try and bailout Japan and by using Euro instead of USD, not affect US inflation so much. He also did it without telling anyone in Europe which quite pissed them off as well.
It's really funny seeing these shenanigans take place with all the pompousness the US shows regarding its currency and how it pretends it itself is not going broke.
> So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
The US is pressuring the BoJ not to liquidate US debt to get the USD needed to buy Yen. It only tangentially relates to bond yields, and has nothing to do with defending the USD.
It would be better for the US if Japan just normalized rates, but Japanese politicians are resistant.
If the US is not trying to defend the US dollar, why'd they use Euros and not USD to prop up the Yen, and also why surprise everybody doing so?
And, if it is better for the US if Japan normalized rates, then why did the US buy yen at all? According to you, just telling Japan to raise rates would be better, right?
> If the US is not trying to defend the US dollar, why'd they use Euros and not USD to prop up the Yen
Because that was the legal facility open to them. They used a foreign currency reserve that they had the ability to trade.
> And, if it is better for the US if Japan normalized rates, then why did the US buy yen at all? According to you, just telling Japan to raise rates would be better, right?
Yes. Go re-read my comment: Japanese politicians do not want rates to go up. It’s like a cornerstone of current LDP policy.
I never wrote it hides the debt, it borrows JPY at a low interest rate and then buys U.S. treasuries at a higher interest rate, making money on the difference.
> Because that was the legal facility open to them. They used a foreign currency reserve that they had the ability to trade.
Again, why not use U.S. Dollars? And again, why not at least give a heads up to the Europeans? You are not directly addressing my questions.
> Yes. Go re-read my comment: Japanese politicians do not want rates to go up. It’s like a cornerstone of current LDP policy.
No, you re-read my comment that you just slapped into your response and then completely ignored. WHY DID THE US BUY YEN AT ALL? You are ignoring my point and just restating your conclusion.
Hm?
> > The carry trade hides a lot of US debt, too.
Your comment.
Anyway, have a nice day.
> It's expected for the BoJ to raise the rate to 1.25% in 2 weeks.
Cool. Only like four hundred basis points to go!
Since Bessent did what he did the whole issue has been swallowed up in the idiotic partisan maw of US politics, but it’s just a self-defeating effort by Japan to fight the market.
The US has the same problem. Maybe less extreme, but the balance sheet has tons of short-term debt, and rates aren’t cooperating.