The BoJ has to raise rates. Dumping Dollars to buy Yen is spitting in the wind.

foo12bar 37 minutes ago | parent | next [-]

It's not that simple. Untold numbers of U.S. bonds are held by people running the "carry trade" (borrowing JPY at low interest rates in order to buy mostly U.S. treasuries and make money on the difference).

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.

	▲	timr 28 minutes ago \| parent [-]
		It’s true that the carry trade unwinding suddenly would be…traumatic (and debatably the root cause of the rate spike that killed SVB a few years ago), but it could be managed gradually, and must be done to bring Japan back from the brink. > 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.

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missedthecue an hour ago | parent | prev | next [-]

They can't afford to. At 4.5% average rates, their interest payments will consume something on the order of 80% of their government budget and huge portions of GDP. Their 30 year paper was trading at 4.1% last week. If the short end of the yield curve pumps even higher, they are utterly screwed. Consequences of 250% debt to gdp.

	▲	timr 40 minutes ago \| parent [-]
		Well, hopefully they’ve been smarter than the US about managing bond duration, but yeah. Doesn’t change reality in the currency markets, and sometimes you have to choose between the devil and the deep blue sea. The US has the same problem. Maybe less extreme, but the balance sheet has tons of short-term debt, and rates aren’t cooperating.

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charcircuit an hour ago | parent | prev | next [-]

Do you mean BoJ? JCB is a credit card company. It's expected for the BoJ to raise the rate to 1.25% in 2 weeks.

	▲	timr an hour ago \| parent [-]
		Yes, my bad. I got in the bad habit of referring to it like the ECB. > 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!

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m00dy an hour ago | parent | prev [-]

TGA account has around $1T in it. So, Bessent has enough ammo to defend the castle of Japan.

	▲	timr an hour ago \| parent [-]
		It’s pointless. Setting money on fire to avoid the inevitable. 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.