Speaking at Southern Methodist University on Tuesday, Treasury Secretary Scott Bessent dared currency traders, and indirectly the bond market, to challenge him as he wages a multi-front battle to stabilize markets amid Iran war turmoil while also trying to slow rising yields that threaten to make government borrowing more costly.
“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,” Bessent said. “And you can bet against me if you want.”
It — or they — wanted to.
In late July, the U.S. joined Japanese officials in buying yen in order to prop up the struggling currency. Although it wasn’t the Treasury’s stated intention, one concern surrounding its intervention was the risk that Japan, one of the largest holders of U.S. government debt, would offload a large chunk of U.S. treasuries to right the ship, which could send U.S. Treasury yields higher. Yields rise as the price of bonds fall.
Following the joint intervention, the yen has strengthened against the dollar, and this week it surged to a nearly seven-month high in Asia, showing stability likely celebrated by Bessent, who had previously said the yen was “undervalued.”
