Economics

https://archive.ph/4GIc0

The Federal Reserve may soon be drawn into the Trump administration’s efforts to back the embattled currency of U.S. ally Japan.

Treasury Secretary Scott Bessent wants the apolitical Fed to expand a lending facility that would enable Japan to support its currency without roiling the sensitive U.S. Treasurys market. That request comes as new Fed Chairman Kevin Warsh is seeking to rewrite the relationship between the Treasury and the Fed. How the two collaborate could have important consequences for the management of the $29 trillion Treasurys market and could see the Fed take on a new role backing U.S. financial diplomacy.

It isn’t clear how much support the chairman has within the Fed for major policy changes. The Fed declined to comment.

The Treasury didn’t respond to a request for comment about its plans.

Japan spent $53 billion intervening in the currency market on Thursday. This is probably the largest single day intervention in history.

And it only gets better because the US Treasury has reportedly told a number of banks through the NY Fed to stand by for future actions in the yen market.

Well, Japan owns $1.1 trillion of US Treasuries, and a yen in free fall forces Japanese institutions to fund hedges and repatriate. USDT is obviously the asset they would sell.

The US 30 year is at a 19 year high with $8 trillion of paper maturing inside a year. Washington can't afford its biggest foreign creditor to become a seller, so it's cheaper to buy yen than to buy back its own bonds.

https://archive.ph/DVm6q

https://archive.ph/E86Tu

https://archive.ph/UkvyV

• The economy added 57,000 jobs in June, with nearly all job growth coming from health care and social assistance.
• The unemployment rate edged down to 4.2 percent, but the employment-to-population ratio fell to its lowest level since June 2021.
• Prime-age employment declined sharply, especially among men, signaling potential weakness in the labor market despite low unemployment.
• Wage growth slowed to 3.5 percent year over year, lagging recent inflation and reflecting softer labor demand.
• Hotels, restaurants, insurance, and motion picture industries lost jobs, while women accounted for more than all net payroll job growth.
• There is still no evidence of an AI-driven jobs apocalypse, as productivity growth remains modest and concentrated job gains point to a cooling — not collapsing — labor market.

https://archive.ph/t7QjW