Treasury Secretary Scott Bessent said he holds an information edge over the Bank of Japan and warned traders not to bet against U.S.-Japan currency intervention, after joint action pulled USD/JPY back from near 164 yen to around 153. Goldman Sachs flagged a secondary risk: unwinding yen carry trades could pressure U.S. stocks.
Treasury Secretary Scott Bessent told business-school students at Southern Methodist University on Tuesday night that he has inside knowledge of the Bank of Japan's next moves.
Bessent, a former macro trader, said he has good insight into what Japanese policymakers will do next. According to MarketWatch: "Bet against me if you want."
Yen intervention reshapes USD/JPY
The comments referred to the Treasury's intervention in support of the Japanese yen, alongside earlier U.S. efforts to shore up the Argentine peso ahead of the last election. The U.S. dollar traded at nearly 164 yen before the joint U.S.-Japanese intervention and is now trading around 153 yen.
Bond-market pushback
Bessent also announced that the Treasury would buy long-dated securities, but the move had only a momentary effect on curtailing yields. His mentor, Stanley Druckenmiller, criticized the debt-market intervention.
Wall Street watches the carry trade
Goldman Sachs strategist Rich Privorotsky wrote in a note that the secondary implication of Bessent's comments is what matters for stocks. He pointed to investors who borrow in low-yielding yen to reinvest elsewhere, warning they may have to pare those carry trades as the yen strengthens.
Paul Donovan, chief economist at UBS Global Wealth Management, pushed back on the casino framing. He argued that if pre-intervention yen weakness were fundamentally driven rather than speculative, a better comparison is the U.K.'s 1992 exchange-rate mechanism crisis.
Source: MarketWatch
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