why is the yen weak
market vibes
Markets are moving cautiously without conviction this morning.
There is zero indication of short covering in yen futures. There is no indication yet that FIMA has lifted the BOJ’s 60 billion credit line to borrow dollars against its treasury holdings which if not approved is a non-denial denial for further intervention.
The FIMA committee has 3 members, chaired by Warsh with ex NY Fed president Williams and Fed Vice Chair Jefferson but the increase for a sustained dollar yen intervention likely requires broader FOMC assent because it will raise the balance sheet accepting collateral for loans.
FIMA stands for Foreign and International Monetary Authorities (Repo Facility) created in 2020 that lets foreign central banks and monetary authorities temporarily borrow U.S. dollars by posting U.S. Treasury securities as collateral.
Treasuries have completely decoupled from the inflation narrative and oil prices. The new narrative is an existential decision between the very survival of the US treasury and the yen vs an unwind of the yen carry which is an existential threat to TBTF banks holding unknown swap risk. this X post caught my eye … lol …Warsh has been typically silent.
Gold has paused. Open interest is up 30,000 on the intervention narrative which is a fig leaf for the yen carry narrative that few trusted financial voices dare to utter.
