Bessent Tells Traders He Has Inside Information When the Treasury Buys Yen

Scott Bessent, the United States Treasury secretary, told an audience at Southern Methodist University in Texas that his currency operations now carry an information advantage no private trader can match. "I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do," he said, adding, "And you can bet against me if you want," as The Japan Times reported.

Bessent, a former hedge fund executive, recently oversaw the first purchases of yen by American authorities in three decades and last month announced expanded buybacks of United States Treasuries intended to restrain a rise in long-term yields, according to Bloomberg's account of the remarks. The Bank of Japan is leaning toward a further 25 basis point increase on September 18.

What is being described here is a monetary authority saying it knows another central bank's intentions in advance and will trade on them. That is a statement about the structure of the market, not about the yen. Intervention addresses a symptom, not the cause. The yen is weak because Japanese policy rates sit far below American ones, and no volume of official buying changes that arithmetic. What official buying does change is the risk of holding a position against the state, which reduces the number of participants willing to price the currency at all.