Like everything else to do with Washington these days, the Trump administration’s effort to help the Japanese Finance Ministry arrest the yen’s inexorable slide had an air of farce to it.

On July 31, while snapping pictures during one of Trump’s rambling, on-the-record cabinet meetings, a photojournalist from Reuters noticed something interesting sitting on the table in front of Scott Bessent: A to-do list scrawled on a piece of Camp David letterhead.

By appearances, Scott didn’t have a lot on his plate that day. He didn’t have to “get Windex” or “pick up milk,” nor “water fern” or “change HVAC filter.” In fact, Bessent had just one job on Friday, according to his list: “Buy Japanese Yen (JPY) $5-10 bil.” Sensing an opportunity, Daniel Heuer (the photojournalist) snuck a picture of the list over Bessent’s shoulder at 11:33 EDT.

By then, USDJPY was already halfway to what, by Monday afternoon in Tokyo, was an eight-big-figure drop. And markets were well aware the US had either joined the fight to shore up the yen or would soon. (The day before, US officials conducted rate checks for the second time in 2026.)

The figure above gives you some context for the effectiveness of the coordinated intervention, which Bessent confirmed on Sunday. “Friday’s foreign exchange actions countered disorderly yen movements,” he said, adding that Treasury won’t “hesitate to participate in further joint intervention.”

You’re reminded that Satsuki Katayama’s intervention threats have proven insufficient to arrest the yen’s slide this year, even when the finance ministry follows through. Thursday’s actions by Japan counted as the largest one-day intervention ever.

As I put it on July 22, the MoF can “conjure an impressive filled candlestick for a day, but can’t beat the fundamentals.” Those fundamentals argue against the yen, even if, at USDJPY 164, it was indeed undervalued.

There’s the long term-chart for the umpteenth time in two months. The yen was the weakest in 40 years despite the BoJ’s (belabored) efforts to normalize policy and sharply higher JGB yields.

I won’t spend too much time recapitulating given how often I retell this same story, but the short version goes as follows (indented for clarity):

In Sanae Takaichi, Japan has a quasi-populist head of state running expansionary fiscal policy despite the world’s largest public-sector debt burden. Takaichi promised to address the rising cost of living, but as a Shinzo Abe disciple, she’s not enamored with the idea of a rapid exit from monetary policy accommodation. And as a quasi-populist, she’s not excited about fiscal retrenchment either. The war in the Gulf complicated the situation. Japan relies on imports for its oil, so surging energy prices exacerbate FX pass-through inflation.

Although the BoJ’s call rate sits at a three-decade high, “high” in the Japanese context just means 1%. The yen remains a low-yielder and rate differentials still favor the dollar despite moving dramatically in the yen’s favor over the last 18 or so months.

Again: The fundamentals argue against the yen, meaning uncoordinated intervention by Japan is just throwing good money after bad. Figuratively and literally. Hence the need for a US assist.

Conceptually anyway, Japan’s solo interventions are tantamount to the world’s largest US creditor liquidating Treasurys. (What are you doing when you intervene? You’re selling dollars and what are “dollars” in that context? Not cash sitting in an FX trading account. Rather, some manner of US debt.) That’s not ideal given the implied upward pressure on US yields.

In an apparent effort to mitigate that, Bessent explicitly suggested the Fed upsize the FIMA Repo Facility. If Kevin Warsh obliges, it’d mean transforming an emergency USD liquidity backstop into an FX intervention facilitator. I don’t know if that’s ideal, and I’m not sure it’s an entirely genuine suggestion, at least not in this particular context. Read on.

The point of that facility is to allow foreign monetary authorities to access USDs for the purposes of providing dollar liquidity to, for example, local banks during times of stress. The mechanism’s simple: Monetary authorities pledge their Treasurys as collateral for short-term dollar loans. In addition to preventing dollar funding stress in other locales from boomeranging back onto US financial markets, the facility has the added benefit (for America) of forestalling UST fire sales.

There’s nothing “wrong” with Bessent’s idea to upsize the limits on those collateralized dollar loans if it means Japan would be able to access the firepower it needs to support the yen without selling Treasurys in the open market (i.e., without driving up US yields and potentially creating undue volatility). But is FIMA Repo really for that? That’s a question. I don’t know the answer. If the answer’s “well it can be, but really isn’t” (as I suspect), then maybe don’t set the precedent? And anyway, does Japan actually need another way to access USDs? I doubt it. More on that below.

It’s also notable that Bessent apparently sold euros to buy yen, not dollars. The FT cited officials familiar with the trades in confirming the NY Fed sold euro and bought yen on behalf of Treasury through Goldman and Morgan late last week. Although “Call ECB” wasn’t on Bessent’s to-do list, he did reach out, the linked article said.

Notwithstanding Trump’s insistence on lower policy rates stateside and extreme aversion to what he calls “cheating” on the part of America’s trade partners, the administration’s official line still revolves around the maintenance of a strong dollar. That might explain to decision to go the euro route.

I don’t want to downplay the first joint-G7 FX intervention since Fukushima and the first coordinated US-Japan yen-buying operation in nearly three decades, but it’s difficult to escape the notion that the volume of media coverage (and you can take “volume” to mean quantity and loudness) seems to reflect a thirst for material in a parched summer news landscape.

For one thing, this was all but a foregone conclusion. Remember what I wrote here not two weeks ago in “The Yen Canary“:

As for additional FX intervention by the finance ministry, Japan’s sitting on plenty of firepower, what with its $1.14 trillion of Treasurys. But if the April 30 experience is any indication, burning that [will prove ineffective]. The intraday USDJPY low was 155 or so on May 6. [We’re back above 160] and it’s not even August. Scott Bessent might help. Presumably, Trump could be convinced that a free-falling yen’s not in America’s interests, and coordinated intervention would send a much stronger message than the one markets are ignoring from Katayama.

Fast forward eight sessions and here we are. The “yen canary” article wasn’t even the most-read piece I published that day, let alone that week or in July. But… well, you should’ve read it.

Furthermore, this situation’s not going to stabilize durably until the fundamentals are more favorable for the yen. No, traders won’t be eager to fight Bessent and the MoF on any given day or during any given week. But unless and until there’s an actiual reason for the yen to strengthen, they’ll fight a war of attrition over months and years knowing habitual, large-scale, coordinated interventions are unsustainable and inconsistent with principle. (As Bloomberg reminded markets on Monday, the IMF says “a currency may be classified as free-floating if official intervention is limited to no more than three episodes over a six-month period, with each episode lasting no more than three business days.”)

Finally — and related to the above-mentioned point re: the volume of financial media coverage — this whole thing smacks of pageantry. That’s lost on nearly everyone it seems, but not on “Fed guy” Joseph Wang, the Columbia-trained attorney-turned senior Desk trader best known for “Central Banking 101,” an unlikely hit if ever there was one. (Self-published accounts of life on the open markets desk aren’t exactly Harry Potter sequels when it comes to being shoo-ins for the bestseller list.)

“Bessent’s promotion of the FIMA Repo Facility is just theatre to boost the effect of his FX intervention,” Wang wrote Monday. “The open secret is Japan already has hundreds of billions of dollars parked at the Fed’s foreign repo pool, basically a checking account for foreign central banks [and] private sector repo is abundant, trading at notably lower rates than the FIMA facility.”

Throw in Japan’s standing swap line with the Fed and the reality, as Wang went on to say, is that Tokyo “never has to sell Treasurys to get dollars.”

In other words: A lot of this is just hand-waving. An attempt to amplify the story such that the narrative itself becomes larger than life and thereby scares away anyone tempted to push the issue by betting on renewed yen weakness.

And that brings us full circle. The “to-do” list joke wasn’t on Bessent. It was on anyone who actually believed he makes legible, hand-written to-do lists on presidential stationery and leaves them sitting on the table at public cabinet meetings for the financial media to photograph.

I mean Jesus Christ, folks: Say what you will about Bessent, but I doubt seriously he needed to remind himself that the abbreviation for the yen is “JPY.”

---