{"id":2392,"date":"2026-08-16T02:42:50","date_gmt":"2026-08-16T02:42:50","guid":{"rendered":"https:\/\/www.vaultinsider.top\/?p=2392"},"modified":"2026-08-16T02:42:50","modified_gmt":"2026-08-16T02:42:50","slug":"global-finance-looks-like-a-giant-jenga-tower-propped-up-by-a-japanese-yen-thats-in-deep-trouble","status":"publish","type":"post","link":"https:\/\/www.vaultinsider.top\/?p=2392","title":{"rendered":"Global finance looks like a ‘giant Jenga tower’ propped up by a Japanese yen that’s in deep trouble"},"content":{"rendered":"

<\/p>\n

The first U.S.-Japan joint intervention in three decades aimed at boosting the yen has come and gone without doing much to ease anxiety in currency markets.<\/p>\n

\n

Treasury Secretary Scott Bessent\u2019s notepad\u00a0suggested the U.S. bought\u00a0$5 billion-$10 billion worth of yen, while Japan\u2019s move topped $50 billion. The exchange rate initially strengthened to about 157 yen per dollar from nearly 164, but has since given back some gains and hovered around 159 on Friday.<\/p>\n

To be sure, efforts to prop up the yen were seen as short-term measures to address the symptoms rather than the root causes of the currency\u2019s weakness. Those include Japan\u2019s massive debt that exceeds 200% of GDP, fiscal stimulus that\u2019s expected to worsen the deficit, and a central bank that\u2019s been slow to raise rates in the face of high inflation.<\/p>\n

But given that the yen\u2019s recent instability was enough to trigger the U.S.-Japan intervention, a key underpinning of global financial markets appears riskier.<\/p>\n

\u201cNow traders are watching the \u2018yen carry trade,\u2019 where cheap yen borrowing funds bets on higher-yielding assets worldwide, and wondering if it\u2019s about to blow up,\u201d Wall Street veteran Ed Yardeni wrote in a note on Tuesday. \u201cThe financial system right now looks like a giant Jenga tower with the yen as a load-bearing piece.\u201d<\/p>\n

The way the U.S. and Japan intervened had already raised other concerns, especially the fact that the U.S. sold euros, not dollars, to buy yen and that Japan borrowed against its Treasury holdings rather than selling them. <\/p>\n

The tactics called into question the dollar\u2019s dominance and revealed the Trump administration\u2019s underlying fears of how a spiraling yen could worsen the U.S. debt outlook.<\/p>\n

With a stockpile of more than $1 trillion in Treasuries, Japan is the largest foreign holder of U.S. debt. So any drawdown of that reserve would send Treasury yields higher and add further to U.S. debt costs.<\/p>\n

Other countries in Asia could sell Treasuries too. But Yardeni pointed out they are in better shape than they were during the 1998 Asian financial crisis, when currencies across the region crashed. Still, risks remain.<\/p>\n

\u201cTeam Bessent isn\u2019t exactly hat in hand,\u201d he added. \u201cBut decades of assuming that Asia\u2019s central banks dutifully would keep buying U.S. debt are catching up with Washington. Each Jenga piece gets harder to pull without something toppling.\u201d<\/p>\n

\n
\"\"<\/div>
Shandre Bay, 13, of Everett, looses a game of super-sized Jenga as her uncle Kelvin Walker tries in vain to save the game during a holiday party hosted by Boston Celtics guard Isaiah Thomas for Cambridge fire victims at the Royal Sonesta Hotel in Cambridge on Thursday, December 15, 2016. <\/figcaption>

MediaNews Group\/Boston Herald via Getty Images<\/p>\n<\/figure>\n

The yen\u2019s post-intervention pullback was also notable since it happened despite cooler-than-expected U.S. inflation data that lowered the odds of an imminent rate hike from the Federal Reserve.<\/p>\n

Previously, the Bank of Japan\u2019s reluctance to raise its own rates coupled with fears the Fed would hike as soon as next month had been driving the yen\u2019s recent slump. <\/p>\n

But relatively tame readings on U.S. consumer and producer prices this past week offered no reprieve for the yen.<\/p>\n

\u201cThis should be a setting where the Yen rallies versus the Dollar, because US rates are falling relative to Japanese ones, but that didn\u2019t happen. The Yen continued to fall, which is a really worrying sign,\u201d wrote Robin Brooks, senior fellow at the Brookings Institution, in a Substack post titled \u201cThe Yen is in Deep Trouble.\u201d<\/p>\n

He has been sounding the alarm on the yen for a while, warning its extended slide is actually a sign of a simmering debt crisis. Eventually, markets will ignore intervention, which is doomed to fail and merely creates the illusion of stability, Brooks has said.<\/p>\n

On Friday, he called for a \u201cprofound shift\u201d in the Bank of Japan\u2019s policy, going well beyond incremental increases to its benchmark rate.<\/p>\n

Instead, long-term yields on Japanese government bonds must rise to narrow the gap versus U.S. yields that\u2019s been sending the yen lower.<\/p>\n

\u201cBoJ buying of government bonds needs to be scaled back so that this can happen,\u201d Brooks added. \u201cThat\u2019s the only thing that will strengthen the Yen.\u201d<\/p>\n<\/div>\n

#Global #finance #giant #Jenga #tower #propped #Japanese #yen #deep #trouble<\/p>\n","protected":false},"excerpt":{"rendered":"

The first U.S.-Japan joint int… <\/p>\n","protected":false},"author":1,"featured_media":2393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[2232,4645,1335,383,297,393,3322,4643,4644,2017,4646,3874,2745],"class_list":["post-2392","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-currency","tag-deep","tag-federal-reserve","tag-finance","tag-giant","tag-global","tag-japanese","tag-jenga","tag-propped","tag-tower","tag-trouble","tag-u-s-department-of-the-treasury","tag-yen"],"yoast_head":"\nGlobal finance looks like a 'giant Jenga tower' propped up by a Japanese yen that's in deep trouble - Finance News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vaultinsider.top\/?p=2392\" \/>\n<meta property=\"og:locale\" content=\"zh_CN\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Global finance looks like a 'giant Jenga tower' propped up by a Japanese yen that's in deep trouble - 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