"Whenever people say, 'Oh, well, Treasury Secretary is taking a risk,' - well, it's my dream, I have asymmetric information," he said. He walked through episodes where he stepped into markets, including the coordinated yen purchases with Japan's government on July 31.
"I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do," he added. "And you can bet against me if you want."
The July 31 move sparked a quick yen pop, then much of that faded as traders pointed to the Treasury's limited capacity for sustained foreign exchange buying. Since then, the currency has climbed meaningfully, nearing its best levels of the year without any clear new action from officials. The turn higher has rested on rising expectations for tighter BOJ policy, and once the yen crossed 155, momentum traders piled on.
People familiar with the matter say the BOJ is inclined to lift its benchmark rate by 0.25 percentage point on Sept. 18, while keeping the door open to pick up the pace after that. Over the past year, Bessent has repeatedly signaled he'd rather see Tokyo raise rates to bolster the yen than lean on repeated interventions.
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Bessent's comfort stepping into markets goes beyond currencies. He said his move to expand buybacks of older U.S. government debt was meant to cool a "fever" in the bond market. Not everyone is convinced. Billionaire investor Stanley Druckenmiller, Bessent's onetime mentor, has suggested his former protégé is erring by stepping into the bond market.
Japan likely sold part of its foreign securities, including U.S. Treasuries, to help pay for what officials say has been record yen support over the last month, even as Washington worries that such Treasury sales could lift long-term yields. Japan's Finance Minister Satsuki Katayama said Tuesday that the country's currency stance is unchanged since the joint action with the U.S., and that authorities will aim for an orderly FX market.
If the BOJ follows through on rate hikes while Tokyo and Washington remain active around the yen, expect more ripple effects across currency pairs and Treasury yields. That can change how far your dollars go abroad and what your borrowing costs look like at home.
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