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Treasury Secretary Scott Bessent wants to defend Japan's yen, and the path he is pursuing avoids selling U.S. Treasuries into what analysts describe as a sensitive U.S. The Federal Reserve could serve as the mechanism.
That would pull the central bank into a currency operation that has historically sat in Treasury's lane. The bind: yen defense and bond market supply Conventional yen intervention works by selling Treasuries.
The proceeds fund purchases of yen, placing upward pressure on the Japanese currency. The problem Bessent faces is timing. bond market is described as sensitive, and adding supply into it carries its own market risk.
That tradeoff is what makes the standard playbook unattractive right now. The Fed as the workaround The Federal Reserve enters the picture as an alternative to direct Treasury sales.
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