It started with Scott Bessent at the US Treasury intervening in the JPY rate doing a favour for Japan’s finance ministry in late-July. As the chart above shows (scale inverted) the yen rallied sharply, did little for a month and this week suddenly rose again. Over the period of a month, the yen has rallied 5% against the dollar. Not only will Japan’s institutions be reviewing foreign bond and equity investments, but the carry-traders buying US treasury bills could become forced sellers to cover their yen shorts.
This matters, because the only way in which T-bill demand can be maintained is for the Fed to raise its fund rate to maintain an interest rate differential across global markets. Effectively, the competition to attract global investment funds is on. But we
