美国财长贝森特挑战做空日元，美日协调干预外汇市场

[music] Bloomberg Audio Studios podcasts radio news. [music] Welcome to the Daybreak Asia podcast. I'm Doug Krner. We're seeing further strengthening in the Japanese yen this Wednesday morning in the Asia- Pacific. It was late Tuesday in the US that we heard from Treasury Secretary Bessant and he challenged currency traders to counter his efforts to strengthen the yen. He said when he makes market calls nowadays, he is effectively doing so with inside information.

For a closer look at the effect that Mr. Bessant is having on markets, let's bring in Bloomberg Markets live strategist Mark Cranfield. Mark joins from Singapore. Thank you so much for being here. I think it's important to remember that Bessant himself is a former hedge fund executive. He's pretty adept at being able to navigate markets. But Mark, to get your take, what do you think he's doing right now? Well, he's um he's more interventionist than a lot of people in markets are used to from a Treasury Secretary.

If you think of people like Janet Yellen, she certainly it would be very unlikely that she would consider doing some of the things in the foreign exchange and bond market that he has has already started to do and he's talking about. Um I think investors will take some of his comments with a pinch of salt because although the US did join the intervention um to support the Japanese currency and has of course since um strengthened some of the factors were outside his control and have come into play anyway.

Some of the fundamentals in Japan are starting to improve. They were improving. Uh they continue to do so relative to other countries. Um and the Bank of Japan most likely was going to raise interest rates anyway. So um some of that was starting to get factored into the yen. The timing of the intervention was was quite neat from that point of view. It certainly helped. Um it does of course remain to be seen whether or not it can sustain.

We've seen over the past 5 years at least three uh major occasions when dollar yen has dropped by about 20 big figures or so. We're getting heading towards that kind of territory now. and yet it rebounded all the way back to to where it came from before. So I don't think people be counting their chickens just yet as far as the yen is concerned. Probably the bigger impact on markets and the more sustainable one that um traders will be concerned about is what happens to the treasury market cuz it is pretty rare for a sitting treasury secretary to intervene this much in the workings of the secondary treasury market.

And that one um probably will play out over a longer time span. I think in the states on Wednesday we'll have the inaugural expanded buyback operation and right now the market seems to be estimating the size at between 7 to 10 billion. Talk to me though a little bit about the intervention that was coordinated by the US and Japan and the extent to which Japan likely sold a portion of its holdings in foreign securities including US treasuries.

Yes, the data from the Ministry of Finance which has subsequently come out after the intervention itself uh pretty clearly shows that there's a smaller amount of treasuries on hand um from the from Japan. It went below a trillion dollars for the first time in quite a while. So that was significant. [snorts] Um Scott Besson was floating the idea that Japan could use this facility from the Federal Reserve where they effectively borrow treasuries rather than sell them out.

Right. It looks so Japan for now has declined to use that facility. They've just sold what they had in in their portfolio. Um now the looking at things that have um because of the buyback story in uh the Treasury market, what's happened there is it's helping to keep yields down a little bit lower than they probably would be in the US market, which is obviously making the dollar a little bit more bearish and that's helping support the yen.

Now, typically, as we we've seen this play out in Japan before, when the central bank or the government announces that they're going to do buybacks, traders buy those bonds in advance, yields fall. You get the buyback situation itself, and then yields will go back up again once it's out of the way. Traders know how to play this game. We're seeing it in the Treasury market at the moment. So, we get the buyback announcement later today.

It will be surprising if yields continue to stay down once we know how much Bessant is going to buy, unless he really surprises people with a much bigger number than the 10 billion which is being uh rumored in the markets at the moment. And don't forget there's a 30-year auction coming tomorrow, which is going to be the most difficult of this series.

So, let's talk a little bit about the yen right now. I'm seeing it against the green back at around 15360. You mentioned earlier that the Bank of Japan is widely expected to raise rates next week. Certainly the data would support such a move. We had the upward revision on second quarter GDP and the wage data for Japanese workers was amazingly strong. Is it possible now that the BOJ could work in rapid succession, which is to say 25 basis points of tightening next week and then another 25 in October?

Is that within the realm of possibility? Um it it certainly is um unusual um this been rare for the Bank of Japan to do back-to-back interest rate hikes, but this is an unusual circumstance. The probably the key to it is how two things probably. One is how the vote goes for the rate hike next week. So if it's a 90 vote in favor of 25 basis points, that would be a very strong signal that all of the Bank of Japan members are on side and they think it's the right decision and it may well give confidence that they could follow it with another one in October.

Then you have the press conference from Governor OA. Now typically he's tries to be as neutral as possible during press conferences. But if ever there was a time when he wanted to guide investors that there could be more coming down the pipe and that he wants to show strength in the yen, that press conference will be the time to do it. That would be a surprise to people and it would have a huge impact even before they get to the next October Bank of Japan meeting.

So two things to really watch here. The vote in favor of the hike and what Mr. OA has to say. You mentioned a moment ago that long-term yields in the states are remarkably well- behaved under the circumstances. Yes, the buyback is a part of that story. On a day when crude oil prices are rallying, we had a gain in WTI in New York trading of around 1.7%. We are building on that right now another 1.7% higher to around 9465.

That's WTI in the Asian session. Do you think there's some distortion happening if we start to try to figure out what the bond market could telegraph in terms of inflationary pressure that the bond market is not able to really capture that sentiment accurately?

Um I don't think there's too much risk of that. If the the US Treasury interferes in the long end of the market, then the short end of the market will let them know what they think about it. um they can't really control all ends of the Treasury curve at the same time. There's just too the market's just too big and too diverse for that. They've got to pick their spot. And they seem to have decided that they want long-term yields to be the ones that are subdued.

So, the pressure will go back to the short end of the curve and it will start to anticipate that the Federal Reserve needs to do more work. There's a Fed meeting coming up next week as well. Even if we don't get a rate hike when the Federal Reserve, the market will push in the direction that it will expect one sooner rather than later. So it will just transfer the volatility from one end of the curve to the other end of the curve.

It's just a question of where do you want it and how much can you can you put up with. So um I think everyone will be watching oil and the re