Scott Besant's 'To do' note: U.S. Treasury steps into the JPY market

A Reuters photo showed a handwritten note attributed to Scott Besant reading 'To do. By Japanese yen, five to ten billion dollars.' The speaker presents two theories: (1) the note was a literal instruction and the U.S. Treasury is buying JPY; (2) the note was intentionally leaked as a psychological operation to deter short sellers because five to ten billion dollars is tiny in a FX market that trades over a trillion dollars daily. The speaker leans to the latter given the odd specificity ('JPY') and the small dollar amount.

Context: U.S. federal debt grew from '34 and a half trillion' in March 2024 to '40' trillion today—'five and a half trillion dollars in just two years'—creating a policy trilemma the speaker lists as: (1) bring factories home and rebuild manufacturing; (2) achieve price stability; (3) keep the economy and bond market stable. The claim: you can only successfully pursue two of the three, and protecting national security and the bond market makes sacrificing price stability the likely option.

Why intervene in the yen? Japan is a major creditor. A stronger yen would stop Japan's 'yen carry trade' and prevent Japanese institutions from selling U.S. treasuries to buy back yen. The speaker recounts historical precedent: George Soros and the 1992 'Black Wednesday' bet on sterling, and bets around Shinzo Abe's 2012 money printing that drove the yen from the 'high 70s to over $100 per dollar.' Those examples underline that credible signaling can move currencies.

Mechanics alleged: the U.S. reportedly bought yen by selling euros (not selling dollars), preserving deniability while weakening the dollar relative to the yen. Market implications: rising long-term yields (30-year treasury at '5.27%', highest since June 2007) raise borrowing costs, potentially forcing a covert weakening of the dollar and, if a crisis materializes, large-scale money printing. The speaker recommends watching 10/30-year yields, yen strength, oil, and gold as signals; and notes that in past crises gold 'never traded lower again.'

Conclusion: whether accidental or staged, the leak signals a broader U.S. strategy to subtly weaken the dollar to protect borrowing conditions—using market psychology as a tool—and this could presage either a targeted intervention or a path toward inflationary policy if systemic pressure forces a rescue.