In short: The yen is "already the weakest currency in the world," and higher oil makes it harder to defend for big-importer Japan; Bessent fears a yen run sparks "the mother of all sell-offs in US treasuries."
FXY tracks the Japanese yen against the dollar. Japan imports nearly all its oil, so high oil prices weaken the yen, already the world's weakest major currency. That matters beyond Japan: Japanese investors are the biggest foreign holders of US Treasuries. If the yen keeps sliding and Tokyo pushes its pension funds to bring money home, they could sell US bonds and push US interest rates even higher, which is exactly what Treasury Secretary Bessent fears.
14:16But I think the one thing is well taken. Japan. Japan is where it gets very interesting, right? Because Japan is a very big oil importer, okay? And the Japanese yen is already the weakest currency in the world. And the central bank is trying to shore it up. And Besson is trying to shore it up because he's worried that a run on the yen is going to basically lead to the mother of all sell-offs in US treasuries.
In short: The intervention keeps failing: Bessent sold ~11 billion euro of reserves to buy yen, trailed on Instagram so the hedge-fund community would front-run him and do the heavy lifting, and "it bounced back pretty quickly… it's already retraced over half of that full intervention." The war did the damage — "the yen gets killed, energy costs go up on the yen, so now the JGB markets sell." The constraint is symmetric and is why he says they were finished two years ago: too strong a yen unwinds the yen carry trade, too strong a dollar unwinds the dollar carry trade.
FXY holds Japanese yen, so it rises when the yen strengthens. Gromen expects the opposite, and thinks official attempts to prop the yen up keep failing.
The intervention itself is a good story: the US Treasury sold about 11 billion euros of its reserves to buy yen, and trailed it in advance with a stylised Instagram post — in Gromen's reading, so that hedge funds would front-run the trade and do the heavy lifting for him. It worked briefly and then "bounced back pretty quickly," retracing more than half the move, because nothing underneath changed. Japan imports its oil, the war pushed oil up, so Japan needs dollars, so the yen falls, energy costs rise, and its own government bond market sells off.
The reason he tracks this so closely is that Japan is wired into the US bond market from both sides. Japan sells US Treasuries to raise the dollars it needs, which pushes American yields up; but the trap is symmetric and this is the part most people miss — if the yen gets too strong, the enormous pool of money borrowed cheaply in yen and invested elsewhere has to be unwound, which forces selling of stocks and bonds worldwide. Too strong is a crisis; too weak is a crisis. The only playable path is constant liquidity injection to keep the pair in a range, which is his gold argument by another route.
24:54And I think the reason he did the stylized thing was essentially to try to get a bunch of friends in the hedge fund community to front-run him and do the heavy lifting for him. Hey, I'm going to sell 11 billion in euro and if you front-run it, he could get a lot more bang for his buck.
In short: Near-term yen strength, then back to weakness. "About a 75% chance that the Bank of Japan hikes rates in September… there should be some upward pressure on the yen" and dollar-yen moves down "to about 150. And thereafter, it's going to be right to sell the yen again" — their "process of gradualism" after decades of deflation takes dollar-yen "back up to 175, 180." Frames the whole thing as "a huge rate repatriation theme… it really has global implications."
FXY simply holds yen, so it rises when the yen strengthens against the dollar. Newton sees strength first, weakness after.
Near term: Japan's government has intervened to support the currency and Prime Minister Takaichi is publicly pushing the Bank of Japan toward a rate hike, which Newton puts at about 75% for September. Higher Japanese rates make the yen more attractive to hold, so he expects dollar-yen down to about 150 (a lower number means a stronger yen).
After that: "it's going to be right to sell the yen again." Japan's central bank moves in tiny steps after decades of deflation, so its rates stay far below America's, and the currency drifts back down — dollar-yen "back up to 175, 180."
Why anyone else should care: Japanese investors have spent years sending savings abroad to earn higher yields. If Japanese yields rise enough, that money comes home — "a huge rate repatriation theme… it really has global implications" — pulling a large, long-standing bid out of foreign bond markets.
34:24We'll see what kind of influence that has, but I think there's about a 75% chance that the Bank of Japan hikes rates in September. So, there should be some upward pressure on the yen for those that care on that. I think we probably have a move down in dollar yen to about 150. And thereafter, it's going to be right to sell the yen again.
In short: The intervention will not hold. They intervened near 163–164, "which was a multi-year high"; USD/JPY is already back to 159.25 having retraced over half the move, with 160 reported as the next trigger. "Nothing's changed with the underlying" — the Middle East pushed Japan into a current-account deficit with oil back over 80, and Japan is structurally short dollar oil — "so yeah, I absolutely think the market's going to push back to where it was… they're going to have to do the same thing over again."
FXY simply holds Japanese yen, so it rises when the yen strengthens against the dollar. Gromen expects the opposite: the yen weakens again, and the recent official intervention that pushed it up will not hold.
Japan's authorities stepped in near a multi-year low for the yen (around 163–164 to the dollar) and it has already given back more than half of that move, sitting near 159.25 — with reports that 160 is the level at which they intervene again. Gromen's point is that intervention treats the symptom: "nothing's changed with the underlying." Japan imports essentially all of its oil, oil is back above $80 because of the Middle East, so Japan needs more dollars, which pushes the yen down, feeds domestic inflation, and pressures its own bond market.
The consequence reaches far beyond Japan, which is why he tracks it. To defend the yen Japan sells US Treasuries; to stop US yields spiking, the US Treasury supplies dollar liquidity. So each round of yen weakness mechanically produces another dose of dollar creation — the engine behind his gold call. And the part he says he's really watching is not the intervention itself but the market's reaction to the second one, when investors conclude they were fooled about Warsh and Bessent being different.
23:55Do you think that's right? That basically the market's just going to push this thing to where they have to do multiple interventions and just sort of test how much they're willing to actually do here. — Yeah, I think it is because nothing's changed with the underlying, right? Japan has been pushed into a current account deficit by our adventure in the Middle East. Oil's back over 80.
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Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.