I'm being asked why the US broke a decade-plus policy of not interfering with the market-setting of exchange rates. I suspect the drivers include: Trade Competitiveness: Washington sees an excessively weak yen as a drag on American trade competitiveness, not just in bilateral trade with Japan but also in third markets across the globe. Yield Concerns: In past solo interventions, Tokyo has tended to fund its yen purchases by selling US Treasuries, a move that inadvertently pushes bond yields higher and drives up domestic borrowing costs for the American government, companies, and households. The upside for both countries is clear: This type of joint intervention carries a lot more weight, and markets are paying attention, at least initially. The catch for the US? Washington has now signed onto a strategy whose ultimate success doesn't rest in its own hands. Instead, as discussed in previous posts, it hinges on a comprehensive policy alignment in Tokyo among the Bank of Japan, the Ministry of Finance, and the Prime Minister’s Office. #economy #markets #japan #yen #currency #intervention #fx