punch lines ... part 2

market vibes

August 3…)

My evening note,punch lines, got a hefty amount of DMs and emails and some mannerly direct commentary from readers. I thought rather than answer selectively in comments to each reader I’d clarify my thinking with a follow up.

Put the case that the recent coordinated intervention by the U.S. Treasury and Japanese authorities to support the yen is not merely an act of currency stabilization, but a deliberate dual-purpose operation. Large spec short positions in both the yen and long-dated U.S. Treasuries are what I think is a linked “short bubble.” Just go on X and read the lopsided postings by the bears and AI bots.

These intervention policies can be structured with zero cost or positive carry with euros. In fact when I saw the treasury selling euros that was for me… a tell. This hypothesis would align the national interests of the US Treasury and Japanese authorities without either entity buying their own issues. Only a fool would not see the direct market linkage in these two critical national interests.