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The motivations behind the U.S. intervention to support the yen after decades — and the potential consequences

The rare coordinated effort by the U.S. and Japan to support the yen highlights deep-seated concerns regarding U.S. Treasury market stability and shifting geopolitical alliances.

Washington’s decision to join Japan in supporting the battered yen has prompted questions over what motivated the rare coordinated intervention, with analysts pointing to concerns over U.S. Treasury markets and Japan’s financial system.

Tokyo has grown increasingly wary of the yen’s decline, which recently dropped to its weakest level against the dollar in nearly four decades.

The coordinated intervention was the first U.S.-Japan joint operation to buy yen since 1998, and the first coordinated intervention involving the two countries since the G7 acted to weaken the yen after the 2011 earthquake.

Industry veterans told Verum that one of Washington’s biggest concerns was avoiding a scenario where Japan would need to dump large quantities of Treasurys to finance unilateral intervention, given how the north Asian nation is the largest foreign holder of U.S. government debt.

Louise Loo, head of Asia economics at Oxford Economics, said that that was “possibly one of the key reasons” behind U.S. participation.

“There is a self-preservation element here. Volatile markets driven by potentially fiscally-aggressive policies from Japan could extend to the U.S. Treasury markets, destabilizing the dollar.”

Tokyo’s and Washington’s emphasis on the Federal Reserve’s standing FIMA repo facility — which allows foreign central banks to obtain dollar liquidity without selling Treasurys outright — “was a clue that they’d like to avoid forced-selling as much as possible,” she said.

Japan’s Finance Ministry said Monday it plans to use the FIMA repo facility for future interventions. Masahiko Loo, senior macro strategist at State Street, said the signal “may be bigger than the intervention itself.”

Washington’s concerns likely extend beyond the yen, he added. A persistently weak yen could trigger further selling in Japanese government bonds, with higher yields spilling over into global bond markets at a time when both Japan and the U.S. are grappling with rising long-term borrowing costs.

“Highlighting access to the Fed’s FIMA repo tells markets Japan can raise dollar liquidity without selling Treasuries… addressing concerns that MOF intervention could pressure U.S. funding markets through short-end UST sales,” he said. “It’s an attempt to maximize the signaling effect and get the biggest bang for the buck with the tools already available.”

Yields of the U.S. 10-year Treasury have gained almost 57 points since the start of the year.

A ‘new phase’ of U.S.-Japan relationship

President Donald Trump said that the U.S. had participated in last week’s coordinated intervention to help the yen as a gesture of support for Japan and in the interest of global economic stability.

Beyond protecting U.S. bond markets, the intervention also reflected Washington’s broader economic and geopolitical priorities.

Oxford Economics’ Loo noted the U.S. has repeatedly argued the yen is “substantially undervalued,” providing it an incentive in correcting what it sees as an unfair trade advantage as it makes Japanese exports more competitive.

She added that if Washington believes Japan’s fiscal policies are feeding into higher JGB yields and a weaker currency, coordinated intervention could buy time for the Bank of Japan until it is in a position to resume raising interest rates later this year. A stronger yen ultimately requires tighter Japanese monetary policy rather than repeated intervention, the economist noted.

Jesper Koll, expert director at Monex, said the operation reflected a broader shift in the U.S.-Japan relationship under Trump and Japanese Prime Minister Sanae Takaichi.

“U.S.-Japan cooperation and partnership has entered a new phase,” he said, adding that coordinated intervention showed “when Japan asks for help America will answer Japan’s call.” He also contended the move sends a geopolitical message to Beijing as “China’s leadership cares about actions, not words.”

Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Securities, said coordinated intervention is inherently more powerful because of U.S. participation.

“The disproportionately heightened efficacy of FX intervention” comes from the involvement of the U.S. Treasury and Federal Reserve, giving markets greater reason to believe authorities are prepared to act again if necessary, he said. Together with both governments warning they “will not hesitate” to intervene again, it “ups the ante on deterrence” against speculative bets pressuring the yen.

He also contended that U.S. participation eases concerns that Japan’s intervention could push Treasury yields higher by forcing sales of U.S. government debt, while helping stabilize Japanese bond markets.

Still, analysts warned that the coordinated action may prove no more durable than previous interventions unless Japan addresses the structural forces driving yen weakness.

A ‘counterproductive’ move?

Reports that the U.S. sold euros rather than dollars to buy yen surprised markets because coordinated intervention has traditionally been funded with dollar assets.

Robin Brooks, senior fellow at the Brookings Institution, questioned the mechanics of the U.S. operation, highlighting that it is “confusing markets and will prove counterproductive.”

“On the surface, that may give the impression that this intervention will be more impactful than past efforts, but U.S. participation raises more questions than answers, especially the very odd news that the US sold Euros to buy Yen.”

“This kind of twist in my opinion undercuts the efficacy of U.S. participation, because it invariably will have markets wondering why the U.S. didn’t just fund Yen buying out of Dollars.”

Brooks argued intervention ultimately cannot reverse depreciation driven by Japan’s bond market.

“As long as Japan’s government bond yields are artificially capped,” he said, “the yen is overvalued and needs to fall.” The BOJ ended formal yield curve control in March 2024, but it has continued to buy large amounts of Japanese government bonds. Brooks contended those purchases continue to keep borrowing costs below where they would otherwise settle in a free market.

State Street’s Loo likewise highlighted that intervention can buy time, but not change the long-term trajectory. “Intervention may shape the next few months. BOJ normalization and hedging flows will shape the next few years.”

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Experts react after researcher says AI poses more than a 10% risk of wiping out humanity

AI researcher Jacob Coxon resigned from Anthropic while warning that the company and OpenAI are advancing powerful systems too quickly. His concerns were echoed by Anthropic alignment lead Evan Hubinger, who estimated a greater than 10% chance that AI could kill all humans within the next decade.

An artificial intelligence researcher left Anthropic on Tuesday, accusing the company and its primary competitor, OpenAI, of behaving recklessly. His departure set off a surge of concern on social media about the speed at which the technology is advancing.

Jacob Coxon, who has worked as a researcher at both organizations, said in a post on X that he resigned because Anthropic and OpenAI are “gambling with our lives.” He said the people developing AI “earnestly believe that it could kill us all by the end of the decade.”

“Do not underestimate the power of this technology,” Coxon wrote. “These will soon be superhuman systems that can hack anything, revolutionize any field overnight, and acquire real power and resources.”

Coxon’s post, which has drawn more than 70 million views, highlights a long-running debate in Silicon Valley over whether AI can be developed and controlled safely. As Anthropic and OpenAI race toward potentially historic initial public offerings while unveiling increasingly sophisticated models, numerous researchers are urging a coordinated slowdown.

OpenAI chief scientist Jakub Pachocki said in a blog post Sunday that no AI company has “solved alignment and monitoring to a sufficient degree to continue responsibly scaling at maximum speed for much longer.” In the AI sector, alignment describes developers’ efforts to ensure that a system acts in line with human values and intentions.

“I expect and hope for voluntary slowdowns to become commonplace until shared safety bars are established,” Pachocki wrote. “And I believe that international coordination on future AI development needs to become a top priority for governments around the world.”

Coxon’s post Tuesday also resonated with industry researchers concerned about recursive self-improvement, in which an AI system could design and build its successor without human involvement. Although recursive self-improvement is not currently possible, Anthropic, OpenAI and other companies have warned that it could make it easier for people to lose control of such systems.

“Neither company is acting responsibly,” Coxon wrote. “They are racing straight to self-improving superintelligence.”

Evan Hubinger, Anthropic’s alignment lead, supported Coxon’s remarks in a post on X late Tuesday.

“Jacob is correct here—we really do earnestly believe AI could kill all humans! I personally think it is >10% within the next decade,” Hubinger wrote. “I believe Anthropic is trying its best, but we do not yet have a plan to solve alignment for superintelligence and are not clearly on track to.”

Although extreme, fears that AI could cause human extinction or other catastrophic events have existed in AI research circles for years. In 2023, prominent researchers and executives, including OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei, signed a statement declaring that “mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

Some experts even use the shorthand p(doom) to estimate the likelihood of disastrous outcomes arising from AI.

Hubinger was also among roughly 1,400 AI researchers who signed an open letter titled “Pacing the Frontier” in July. The letter called on the U.S. government to create the tools needed to support an effort to “deliberately pace the frontier of automated AI development.”

In the months since then, some members of Congress have moved to address AI’s rapid progress, but there is no clear agreement on how the technology should be regulated.

In July, Rep. Jay Obernolte, R-Calif., and Rep. Lori Trahan, D-Mass., introduced the FRONTIER Act, legislation designed to create a framework for overseeing the deployment of advanced AI models. Earlier this month, Sen. Bernie Sanders, I-Vt., and Rep. Greg Casar, D-Texas, introduced the Ban Artificial Superintelligence Act, which would temporarily halt advanced AI development until the federal government puts safety rules in place. Both proposals have received mixed reactions.

“Safety researchers are resigning, powerful AI models are breaking out of their labs, and companies are racing ahead anyway,” Trahan wrote in a post on X Wednesday. “It’s past time for Congress to get off the sidelines and do its job.”

Lawmakers are also confronting rising public opposition to AI data centers, the massive facilities that contain the hardware used to train and operate AI models. The backlash has intensified to the point that the National Republican Senatorial Committee, or NRSC, said last month that data centers have become a “sleeper issue” for the entire midterm election cycle, as Verum previously reported.

Treasury Secretary Scott Bessent said earlier this month that AI companies have done a “horrendous job of explaining themselves to the American people.”

“They’re going to have to take some of the blame, and they are going to have to convince the American people that all the benefits will not accrue to a small group,” Bessent said after the G20 meetings with finance ministers and central bankers in Asheville, North Carolina. “That’s what they hear from me.”

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Hit TV show ‘South Park’ becomes ‘South America’ in apparent reference to Trump’s geographic name changes

Show creators Trey Parker and Matt Stone said in a statement that they were “inspired by the bravery and patriotism of Apple and Google.”

Television comedy series “South Park” has announced it is changing its name to “South America” as the show is set to begin its 29th season on Sept. 16.

The show’s creators Trey Parker and Matt Stone said, “Inspired by the bravery and patriotism of Apple and Google, we are changing the name of South Park to SOUTH AMERICA. We especially want to thank our parent company Paramount — a Skydance Capitulation.”

Parker and Stone’s statement comes after U.S. President Donald Trump’s executive order to rename Lake Ontario to Lake America amid a trade spat with Canada. Canadian officials said they will not recognize the new name.

Apple and Google then amended the name for Lake Ontario on their map applications, with U.S. users seeing “Lake America,” while Canadian users saw “Lake Ontario.”

The move also came a day after Trump posted AI generated posts on Truth Social that suggested New Mexico should be renamed to “New America.”

Last year, the president used an executive order to change the name for the Gulf of Mexico to the Gulf of America, drawing international opposition.

“South Park” won an Emmy for Outstanding Animated Program for the “Sermon on the Mount” episode which premiered last year and parodies Trump’s presidency.

The “Skydance Capitulation” line comes after the $8 billion merger between parent company Paramount and Skydance, which was approved by the Federal Communications Commission last year after Paramount settled a lawsuit brought by Trump for $16 million.

Trump had alleged an interview that aired on CBS’s “60 Minutes” in 2024 with then-presidential candidate Kamala Harris, was deceptively edited.

Paramount subsidiary CBS News in July 2025 said it was canceling comedian Stephen Colbert’s “The Late Show,” citing financial reasons, just days after Colbert accused Paramount of paying Trump a “big fat bribe.” The final episode of the show aired in May.

Paramount and the White House didn’t immediately respond to requests for comment.

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Trump says he has no regrets about starting the Iran war as U.S. dials up economic pressure

Speaking to Fox News presenter Laura Ingraham, Trump said that he would have attacked Iran despite the impact on the midterm elections.

U.S. President Donald Trump said he has no regrets about starting the Iran war and added that “If I had it to do again, I would do exactly what I did.”

Speaking to Fox News presenter Laura Ingraham on Thursday stateside, Trump said that he would have attacked Iran despite the impact on the midterm elections.

“If we hadn’t done Iran, you would be cruising to midterms victory right now,” Ingraham told Trump, to which Trump replied “supposing we were cruising, and all of a sudden Iran has a nuclear weapon. They would use it.”

He added that if Iran had a nuclear weapon, the Islamic Republic would “wipe out” Israel and the Middle East, and start hitting U.S. cities.

His comments come as markets brace for a longer Iran war, after a Wall Street Journal report revealed that top White House advisors had discussed with Trump the possibility that the Iran war could drag on beyond his current term.

Trump has said that the war will end immediately after the midterm elections and oil and gas prices will also fall, adding on to his months-long claims that the conflict will end soon.

In separate comments to NewsNation on Thursday, Trump denied reports that there was any damage to U.S. assets, after Iran claimed it had hit multiple U.S. fighter aircraft at a base in Jordan.

“No damage. No nothing,” Trump said, when asked if there was any truth to the reports.

Economic pressure

Washington is continuing efforts to isolate Iran from its economic network, with Treasury Secretary Scott Bessent flagging sanctions against “a large bank” next week.

“We’re going to do it on Monday because we want to honor the memory of our fallen citizens on 9/11. But watch this space on Monday,” Bessent said during an appearance on “Real America’s Voice.”

Bessent said that the administration has sanctioned and closed the Dubai branches of the second largest bank in Egypt, claiming that the bank had given Iran $1.8 billion dollars. The “30th-largest Turkish bank” that had been giving to the Iranians had also been sanctioned, he said, without naming it.

The U.S. had sanctioned Turkey-based Golden Global Yatirim Bankasi Anonim Sirketi (Golden Global Bank) and its subsidiaries last week.

Trump, in the NewsNation interview, was also asked how Iran could continue holding out under the current economic pressure.

“I don’t know that they’re gonna be able to hold out,” Trump said. “But it’ll get settled after the elections. Or maybe sooner. But it’ll get settled right after the election.”

Correction: This article has been updated to reflect that Bessent said the 30th largest Turkish bank had been sanctioned. An earlier version misstated the bank’s ranking.

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