# The Hedge Fund Toolkit Behind the Yen Intervention

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 10 Aug 2026, 18 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/1d212339-5e2d-4b50-b9f5-b4a20150b7d8/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

US Treasury Secretary Scott Bessent’s move to prop up the yen was as surprising as its impact was fleeting. By Monday, the yen lost half of its gains since last month’s intervention, raising questions about what comes next. On today’s Big Take podcast, Bloomberg’s Daniel Flatley and Chris Anstey join David Gura to break down Bessent’s unorthodox currency strategy and to explore how far Bessent might be willing to go to support another country’s currency. Read more: How Bessent Brings a ‘Buy-Side’ Mindset to Economic Statecraft Behind Bessent Moves, Wall Street Sees a Bond-Market Angst Listen More: Why a Weak Yen Is America’s Problem Carry Trades, Explained Hosted by David Gura; Produced by Laura Newcombe and David Fox; Reported by Daniel Flatley and Chris Anstey; Edited by Jeffrey Grocott. Fact-checking by Victor Swezey and Brunella Tipismana Urbano; Engineering by Emma Munger. Senior Producer: Naomi Shavin; Deputy Executive Producer: Julia Weaver. Executive Producer: Nicole Beemsterboer. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news watching the yen quite closely. Obviously,
[0:11] Speaker 1: it's not gotten a huge game.
[0:13] Speaker 2: The yen continued its recent slide on Monday, and that's
[0:17] Speaker 2: in spite of a rare joint effort by the US
[0:19] Speaker 2: in Japan late last month to try to strengthen it.
[0:22] Speaker 2: We are currently at one what is that one fifty
[0:24] Speaker 2: eight on Dolly yen, So the yen has given up
[0:28] Speaker 2: half of the games that it made since that intervention.
[0:31] Speaker 2: The US stepped in to prop up the Japanese currency
[0:34] Speaker 2: for the first time since nineteen ninety eight, and that
[0:38] Speaker 2: caught investors and central bankers by surprise. The intervention was
[0:42] Speaker 2: spearheaded by US Treasury Secretary Scott Besson, who cut his
[0:46] Speaker 2: teeth as a macro trader working at hedge funds before
[0:49] Speaker 2: he started his current job, effectively running the world's largest economy.
[0:54] Speaker 2: For Besson, propping up the yen is more than the
[0:56] Speaker 2: US helping an ally. It's also something that could head
[0:59] Speaker 2: off market moves that could result in higher interest rates
[1:02] Speaker 2: in the United States.
[1:04] Speaker 3: The last thing he wants is to see, you know,
[1:06] Speaker 3: US mortgage rates going even higher.
[1:09] Speaker 2: Chris Antsy is a senior editor on Bloomberg's Global Economy Team,
[1:13] Speaker 2: and he points out Japan is the largest foreign holder
[1:16] Speaker 2: of US treasuries. Chris says that if Japan wants to
[1:19] Speaker 2: prop up its own currency by buying yen, the dollars
[1:22] Speaker 2: it needs to do so could come from selling some
[1:24] Speaker 2: of its US debt.
[1:25] Speaker 3: The biggest foreign holder of treasuries dumping a bunch of
[1:28] Speaker 3: their holdings. That's going to put pressure on tenure treasuries,
[1:32] Speaker 3: thirty aear treasuries, and the thirty year fixed rate mortgage.
[1:37] Speaker 2: Beston's intervention may not be one and done. The Treasury
[1:41] Speaker 2: Secretary recently asked the Federal Reserve to make a policy
[1:44] Speaker 2: change that would let Japan borrow more dollars against its
[1:47] Speaker 2: treasury holdings without having to sell them. Previous Treasury secretaries
[1:51] Speaker 2: were reluctant to intervene in currency markets, and investors are
[1:55] Speaker 2: wondering how far Bestin is willing to go.
[1:58] Speaker 1: At the end of the day, you're sort of playing
[2:01] Speaker 1: with the good faith and credit of the United States government.
[2:03] Speaker 2: Bloomberg's Dan Flatley covers the Treasury Department.
[2:06] Speaker 1: You know, the Treasury Secretary is not supposed to act
[2:09] Speaker 1: as a hedge fund manager. The Treasury Secretary is supposed
[2:12] Speaker 1: to act as the chief financial seward of the United
[2:14] Speaker 1: States economy. So you know, there are enormous stakes here,
[2:18] Speaker 1: and so all's well, that goes well until until things
[2:23] Speaker 1: go off the rails. Things are going fine now seem
[2:26] Speaker 1: to be, but that's not to say that is indefinite.
[2:34] Speaker 2: I'm David Gerret and this is the big take from
[2:36] Speaker 2: Bloomberg News today. On the show, Scott Beston's interventions in
[2:40] Speaker 2: global currency markets? What impact are they having and what's
[2:44] Speaker 2: the endgame? All right, let me set the table here
[2:54] Speaker 2: with you, Chris. To start over the last half decade
[2:57] Speaker 2: or so, Japanese yen has weakened the the dollar. Five
[3:00] Speaker 2: years ago, a dollar would buy you, say, hundred and
[3:03] Speaker 2: ten yen. For the last half year or so, a
[3:06] Speaker 2: dollar gets you more than one hundred and fifty en
[3:09] Speaker 2: for starters. What is wrong with a weekend? Why does
[3:11] Speaker 2: Japan want a stronger currency?
[3:13] Speaker 3: Well, it wants a stronger currency because it has been
[3:17] Speaker 3: flirting with the weakest levels in four decades and at
[3:23] Speaker 3: a time of elevated energy costs. Right, they have to
[3:27] Speaker 3: use a lot more yen to buy imported oil, fertilizer.
[3:32] Speaker 3: All kinds of commodities, and the prices of those have
[3:35] Speaker 3: already been rising, right, but it's rising even more in
[3:39] Speaker 3: yen terms. So Japanese households and companies have seen their
[3:45] Speaker 3: purchasing power really demolished. And Japan's interest rates have been
[3:50] Speaker 3: coming up a little bit over the past couple of years,
[3:54] Speaker 3: but they are still very very low, you know, around
[3:58] Speaker 3: one percent, and they're inflation is at least double that,
[4:02] Speaker 3: so their real interest rates are negative and that is
[4:07] Speaker 3: imparting massive pressure all the time. On the end, obviously,
[4:12] Speaker 3: American interest rates much higher, closer to four percent, and
[4:17] Speaker 3: if the Bank of Japan continues to be a laggered
[4:21] Speaker 3: in raising interest rates, and you're not going to see
[4:26] Speaker 3: intervention really having a lasting effect.
[4:30] Speaker 2: So you have Scott Best at the Treasury Secretary kind
[4:32] Speaker 2: of surveilling the global economy, paying close attention to Japan.
[4:36] Speaker 2: What do we know of why he decided it was
[4:39] Speaker 2: wise for the US intervene at this point.
[4:41] Speaker 1: There's a couple of things going on here. There's a
[4:43] Speaker 1: geopolitical dimension to this, which is essentially sending a signal
[4:46] Speaker 1: to the world that if you're a close US ally,
[4:51] Speaker 1: you are not only the beneficiary of potentially good trade agreements,
[4:57] Speaker 1: defense agreements, other types of policy benefits. But you also
[5:02] Speaker 1: have available to you the might of the dollar and
[5:05] Speaker 1: the US financial system to come to your rescue should
[5:07] Speaker 1: you run into problems. And so I think that there's
[5:09] Speaker 1: also sort of the exigencies of the job when it
[5:14] Speaker 1: comes to defending the dollars global role. So one of
[5:19] Speaker 1: the things that Bestent appears to have been contemplating was
[5:23] Speaker 1: the fact that if Japan needed to defend the end,
[5:26] Speaker 1: it would.
[5:27] Speaker 4: Have to sell US treasuries.
[5:29] Speaker 1: One of the fears is that if Japan were to
[5:32] Speaker 1: sell a substantial portion of its holdings, that could lead
[5:36] Speaker 1: to a rise in yields here in the United States,
[5:40] Speaker 1: which would put upward pressure on things like mortgages and
[5:45] Speaker 1: other things that are already sort of under upward pressure.
[5:49] Speaker 1: And that's leading to obviously, domestically a lot of questions
[5:52] Speaker 1: about affordability and other things like that. So I think
[5:55] Speaker 1: that's his primary concern there. Now we don't have perfect
[6:00] Speaker 1: into his thinking around this, and he has said very
[6:03] Speaker 1: little about the specifics of this operation, but basically what
[6:07] Speaker 1: he has said is that Japan's economy is in much
[6:10] Speaker 1: stronger shape than the market. Sometimes gives it credit for,
[6:13] Speaker 1: and that technically the word is disorderly. That US and
[6:18] Speaker 1: Japanese officials stepped in to prevent disorderly selling in the market.
[6:23] Speaker 2: And Chris notably in this intervention, the US didn't sell
[6:26] Speaker 2: dollars to buy yen. It sold euros to defend the end.
[6:29] Speaker 2: Why was that?
[6:30] Speaker 3: You know, as Dan said, the Treasury hasn't spelled out
[6:34] Speaker 3: exactly what it did here and why. But the euro
[6:38] Speaker 3: yen cross is not very liquid, right. If you think
[6:42] Speaker 3: about the nine point five trillion dollar a day horn
[6:45] Speaker 3: exchange market, right, the number one currency pair is euro dollar,
[6:50] Speaker 3: number two dollar yen. Euro yen isn't on the top
[6:54] Speaker 3: ten there. It's very very illiquid. But if a market
[6:59] Speaker 3: is illiquid, that means you can have a big price impact,
[7:03] Speaker 3: right with a relatively small amount. And if you're using
[7:07] Speaker 3: billions of dollars, I can imagine that the impact is
[7:12] Speaker 3: going to be pronounced. So part of it might have
[7:14] Speaker 3: been he didn't want to sell dollars, put pressure on
[7:18] Speaker 3: the dollar, potentially put pressure on treasuries, send long term
[7:22] Speaker 3: US interest rates up.
[7:24] Speaker 2: Chris, all of this makes me curious about this move
[7:27] Speaker 2: more broadly, when you look at the pantheon of Treasury secretaries.
[7:32] Speaker 2: What's kept them from making these kinds of interventions.
[7:34] Speaker 3: Well, the principle that US Treasury secretaries have embraced for
[7:39] Speaker 3: many decades is one of freely set exchange rates, market
[7:45] Speaker 3: set exchange rates, and they generally don't like the idea
[7:51] Speaker 3: of manipulation and going into the market. We saw in
[7:54] Speaker 3: the Asian financial crisis a bunch of Asian economies, you know,
[7:59] Speaker 3: were maintaining currency pegs that didn't suit their fundamentals, and
[8:04] Speaker 3: then when they broke all of a sudden, there was
[8:06] Speaker 3: a massive crisis. So this philosophy of embracing hands off,
[8:13] Speaker 3: let the market do what it's going to do with
[8:16] Speaker 3: currencies is deeply ingrained in the US Treasury.
[8:21] Speaker 2: Dan, I want to turn to you on I'm hoping
[8:23] Speaker 2: you can explain the way that that the experience he
[8:25] Speaker 2: had doing macro trading kind of could influence his perspective
[8:28] Speaker 2: on the work he's doing now in treasure when it
[8:30] Speaker 2: comes to the end.
[8:31] Speaker 1: Yeah, I mean, he looks across the whole world, obviously,
[8:34] Speaker 1: both as a public official and in his private career
[8:37] Speaker 1: as a hedgehund manager, but Japan has a special place
[8:41] Speaker 1: in his heart.
[8:42] Speaker 4: I think it's fair to.
[8:43] Speaker 1: Say, you know, we're trying to tally up how many
[8:45] Speaker 1: times he's been there. I think it's at least fifty five.
[8:49] Speaker 1: I've heard him say a sixty. In a recent interview,
[8:53] Speaker 1: he talks a lot about the policies of former Prime
[8:57] Speaker 1: Minister Shinzo Abbe Abbe Namik. He's very much enamored of
[9:02] Speaker 1: that policy mix. And obviously during his time at Soro's
[9:06] Speaker 1: fund management, they made a big bet on where the
[9:10] Speaker 1: yen was going based on Abe nomics. He's also obviously
[9:13] Speaker 1: been involved or was involved in the Bank of England
[9:16] Speaker 1: trade that's very famous that George Soros. Yes, absolutely legendary
[9:20] Speaker 1: trade that George Soros was involved in. He brings a
[9:24] Speaker 1: certain what some folks have described as a quote unquote
[9:27] Speaker 1: by side mentality to the Treasury job, which is, you know,
[9:31] Speaker 1: rather than coming from a big bank or someplace where
[9:35] Speaker 1: you're working on mergers and acquisitions or IPOs or other
[9:40] Speaker 1: types of deals that include many, many layers of management
[9:44] Speaker 1: and people. And he is a specialist at identifying macroeconomic
[9:49] Speaker 1: trends that can lead to big bets that pay off.
[9:55] Speaker 1: One of the things that he learned from Soros and
[9:57] Speaker 1: he's talked about this a little bit. Is the value
[9:59] Speaker 1: of leverage. So if you see a really promising prospect
[10:03] Speaker 1: out there and you're very confident in the outcome, there's
[10:07] Speaker 1: no reason to hold back in terms of the amount
[10:11] Speaker 1: of risk that you're willing to take if you believe
[10:13] Speaker 1: that the outcome is more or less assured. I think
[10:17] Speaker 1: that has contributed to an attitude that best exhibits of
[10:21] Speaker 1: making very bold moves from his seat at Treasury that
[10:25] Speaker 1: are frankly unconventional for a Treasury secretary to do, certainly
[10:30] Speaker 1: for a Treasury secretary to do basically on his own.
[10:34] Speaker 1: He's not coordinating these types of moves with big multilateral
[10:38] Speaker 1: groups of countries. He's not going necessarily to the IMF
[10:41] Speaker 1: to talk these things through. He's not coordinating this well
[10:44] Speaker 1: in advance. It's just I see an opportunity here, I'm
[10:48] Speaker 1: going to take it because I believe it's the right
[10:49] Speaker 1: thing to do. And some people like that, and some
[10:51] Speaker 1: people think that that's a pretty risky strategy.
[10:56] Speaker 2: So how well is Treasury Secretary Beston's intervention working and
[11:00] Speaker 2: what does this move tell us about how likely we
[11:02] Speaker 2: are to see more? There are a lot of factors
[11:13] Speaker 2: that could ease pressure on the end. Lower US tariffs
[11:16] Speaker 2: and end to the war with Iran. They could both
[11:18] Speaker 2: bring down costs in Japan. There's also the big gap
[11:22] Speaker 2: between Japan's one percent benchmark interest rate and the rate
[11:25] Speaker 2: in the US three point seventy five percent, something investors
[11:29] Speaker 2: have long exploited to borrow money cheaply to invest in
[11:32] Speaker 2: other places where rates are higher. What's known as the
[11:35] Speaker 2: carry trade also puts pressure.
[11:38] Speaker 4: On the end.
[11:39] Speaker 2: I asked Blimber's Chris Antsy if given all those factors,
[11:42] Speaker 2: Treasury Secretary Scott Besson's intervention made a difference.
[11:46] Speaker 3: Well, it's certainly worked in changing the immediate dynamic. It's
[11:50] Speaker 3: surprised a lot of the market, but it has retreated
[11:55] Speaker 3: since then. It points to the fact that at the
[11:59] Speaker 3: end of the day, you can put a few big
[12:02] Speaker 3: orders through and you can definitely move the market, definitely
[12:07] Speaker 3: show the currency traders that you mean business, that you're coordinated.
[12:12] Speaker 3: But if you don't have a shift in policies, it's
[12:16] Speaker 3: very difficult to break the narrative. And the narrative has
[12:19] Speaker 3: been one where the Bank of Japan is behind the curve.
[12:23] Speaker 3: The Prime Minister Snaya Takaichi has been talking about fiscal stimulus.
[12:30] Speaker 3: This is in the context of Japan having the largest
[12:34] Speaker 3: debt to GDP ratio in the world, well over two
[12:38] Speaker 3: hundred percent of GDP. We think in the US here
[12:41] Speaker 3: that one hundred percent is bad, Well in Japan has
[12:44] Speaker 3: double that. So and they're talking about fiscal easing, relaxing
[12:49] Speaker 3: fiscal rules, and so it just kind of leaves international
[12:53] Speaker 3: investors a little skittish.
[12:55] Speaker 2: On Friday morning, US jobs numbers came out. They were
[12:57] Speaker 2: lower than expected, and then we saw the yen strengthen
[13:00] Speaker 2: against the dollar because traders thought more I guess they
[13:03] Speaker 2: thought more dollar yen intervention could be coming. Just explain
[13:06] Speaker 2: that link for US if you could. What's going on here?
[13:08] Speaker 2: Why we saw that move on Friday morning.
[13:10] Speaker 3: So we saw that move because the unexpected decline in
[13:16] Speaker 3: US payrolls for July was a signal to US investors that,
[13:23] Speaker 3: you know what, maybe the US economy isn't quite so
[13:27] Speaker 3: hot as we thought, and maybe the pressure on the
[13:31] Speaker 3: Federal Reserve to raise interest rates in coming months isn't
[13:36] Speaker 3: as great as we anticipated. US Treasury yields then came down.
[13:42] Speaker 3: That means the gap with Japan isn't as wide as
[13:45] Speaker 3: it was, and so you have the dollar decline, and
[13:48] Speaker 3: it's declined across the board, not only against the end
[13:52] Speaker 3: but others as well. And it even, you know, crept
[13:56] Speaker 3: into my mind when we saw the yen shoot up
[13:59] Speaker 3: against the dollar or after those numbers, did Japan intervene again?
[14:03] Speaker 3: Because intervention can be quite effective when the market's already
[14:08] Speaker 3: moving your way. You know, it's like, you know, you're
[14:11] Speaker 3: pushing on something that's already moving in the direction you want.
[14:15] Speaker 2: Dan What do we know about Secretary Beston's endgame here?
[14:18] Speaker 2: There was that moment kind of kicked all of this
[14:20] Speaker 2: off where a photographer captured him writting on a pad
[14:22] Speaker 2: of paper this to do list and buy Japanese yen
[14:25] Speaker 2: five to ten billion dollars was on there. Do we
[14:28] Speaker 2: have a sense of his commitment to this and sort
[14:30] Speaker 2: of his appetite for further intervention.
[14:33] Speaker 4: I think that there's a few different things going on here.
[14:35] Speaker 1: I mean, the first thing I would say is that,
[14:37] Speaker 1: you know, in case you were wondering, Secretary Besson is
[14:40] Speaker 1: very much enjoying his job. He likes to sort of
[14:44] Speaker 1: do things like the notepad with the to do list
[14:47] Speaker 1: of buying five to ten billion yen. He likes to
[14:52] Speaker 1: sort of be clever, but I think that some of
[14:55] Speaker 1: the things that he works on are obviously very very
[14:57] Speaker 1: serious matters, and so there is always an element of
[15:01] Speaker 1: forethought behind much of what he says, and so I
[15:05] Speaker 1: think he does have an appetite to continue doing some
[15:09] Speaker 1: of this type of intervention, but he does not have
[15:13] Speaker 1: unlimited resources, and so there's only so much that he
[15:16] Speaker 1: can do.
[15:16] Speaker 4: So I think that's probably.
[15:18] Speaker 1: Why you're seeing a little bit of the smoke screen
[15:21] Speaker 1: about well, what are we doing?
[15:23] Speaker 4: When are we going to do it? Are we prepared
[15:25] Speaker 4: to intervene again?
[15:26] Speaker 1: Are we not? Because you don't want to sort of
[15:28] Speaker 1: give markets too clear a signal about what you're going
[15:32] Speaker 1: to do, because you don't want to sort of tip
[15:34] Speaker 1: your hand or lock yourself into a position that you
[15:37] Speaker 1: can't then move out of. And his prior experience has
[15:41] Speaker 1: served him well so far. Whether that can continue to
[15:45] Speaker 1: be the case, I think depends on how credible the
[15:48] Speaker 1: market finds not only him, but also US officials and
[15:53] Speaker 1: US policy more generally as time goes by.
[15:57] Speaker 2: So I think of Scott best in his past life.
[16:00] Speaker 2: If he were to make a bad trade or make
[16:02] Speaker 2: a mistake. Obviously not good for him. Stakes are a
[16:05] Speaker 2: bit higher here, he being the Treasury Secretary, And I
[16:08] Speaker 2: wonder how you think about that, what the risks are
[16:11] Speaker 2: for the US and for the global economy. If Scott
[16:14] Speaker 2: Besen's moves his intervention doesn't have the intended impact.
[16:18] Speaker 1: Yeah, I think the stakes are enormous. A lot of
[16:20] Speaker 1: these instruments do have safeguards built into them, but at
[16:24] Speaker 1: the end of the day, you're sort of playing with
[16:28] Speaker 1: the good faith and credit of the United States government.
[16:31] Speaker 1: There is always the risk of an impact to yields
[16:35] Speaker 1: as we talked about, and interest rates, but also to
[16:38] Speaker 1: losses of taxpayer money. So far, we have seen no
[16:43] Speaker 1: indication that that has happened, but obviously that is a
[16:46] Speaker 1: risk here. And I think, as somebody put it to
[16:49] Speaker 1: me earlier this week, you know, the Treasury Secretary is
[16:52] Speaker 1: not supposed to act as a hedge fund manager. The
[16:54] Speaker 1: Treasury Secretary is supposed to act as the chief financial
[16:57] Speaker 1: steward of the United States economy. Bessint has done this
[17:02] Speaker 1: pretty much on a bilateral basis in a lot of
[17:04] Speaker 1: these situations, which is something that previous secretaries have tried
[17:08] Speaker 1: to avoid. And so you know, all's well, that goes
[17:13] Speaker 1: well until things go off the rails. Things are going
[17:17] Speaker 1: fine now seem to be, but that's not to say
[17:19] Speaker 1: that is indefinite.
[17:25] Speaker 2: This is the Big Take from Bloomberg News. I'm David Gerrat.
[17:28] Speaker 2: To get more from The Big Take and unlimited access
[17:30] Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg
[17:33] Speaker 2: dot com slash podcast offer. If you like this episode,
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[17:41] Speaker 2: Thanks for listening. We'll be back tomorrow

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