Why the yen matters
Summary
Hosts Pushkin and Katie Martin, joined by Toby Nangle, analyze the rare joint US-Japan intervention to support the weakening yen. They discuss how the US used euros to buy yen, aiming to prevent Japan from selling US Treasuries and driving up American borrowing costs. The episode examines the use of the FEMA repo facility and questions the intervention's long-term efficacy without broader global coordination or Japanese rate hikes.
Topics discussed
Introduction: The historic US-Japan currency intervention
Details of the rare joint intervention on July 31
Unusual use of euros to buy yen and lack of ECB coordination
Trump's comments and Japan's inflation struggles
US self-interest: Protecting Treasury yields from Japanese sales
The risk of Japan raising interest rates and bond sell-offs
The FEMA repo facility as a signal to avoid Treasury sales
Why the intervention's effect is fading and future outlook
Long Short: Rain in London and blockchain-backed cheese loans
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