It seems the only reason why the US Treasury and Scott Bessent are getting involved in defending the yen is because they don’t want US Treasuries to be a source of funds for the Japanese. But the historical evidence is clear that intervention is only a very temporary salve, writes Peter Boockvar, editor of The Boock Report.
Ever hear of the Foreign and International Monetary Authorities (FIMA) Repo Facility, established by the Fed in March 31, 2020 – and converted into a standing facility on July 28, 2021? Me neither. But it is what is being used for the Japanese so they can use funds to intervene and not have to sell US Treasuries while doing so.
(Editor’s Note: Peter is speaking at the 2026 MoneyShow/TradersEXPO Orlando, scheduled for Oct. 5-7. Click HERE to register.)
Japanese Yen
The yen just rose four straight days after hitting a 40-year low vs the US dollar. Still, something more substantive needs to happen.
I believe all the Bank of Japan has to do is raise rates and tackle inflation and the yen can rally...but high debt levels there are obviously an offsetting factor. If they do hike and Japanese Government Bonds (JGBs) become even more attractive, US Treasuries will still be a source of funds if money wants to come home.
Bottom line: We’ve apparently reached a point of such fragility in the US Treasury market with the rise in long rates that we are encouraging foreign holders not to sell. By the way, foreigners still own about 30% of marketable securities – though that is down from 50% about 10 years ago.
