Is The Bank Of Japan Hamstrung? Myrmikan Makes A Miner Move

If the BoJ sells treasurys to protect the Yen, they dig the grave deeper for their own banks like Norinchukin, which is super long Treasurys and has to get rid of $65B worth.

• Bank of Japan must sell Treasurys to boost the yen, but doing so will put their own banks, who own Treasurys, into an even deeper hole.

• Bank of Japan interventions are becoming less effective and more costly, and we are dancing at 160 now.

• Repo volume steadily rising, reserves wobbly, proportion of reserves taken up by repos now 60%, 57% last week. Repocalypse at around 85%.

• Daniel Oliver buys Rise Gold. It's a quarter in a slot machine for those interested.

Money Supply Update Tomorrow

M2 numbers come out tomorrow, around 12:30, for May. Since RRPs have been flat I expect that M2 is flat as well. We should trend down in money supply until late August.

The Bank of Japan May be Hamstrung

The Bank of Japan has intervened three times in the Yen since October 2022. The first time was at 152, and they got the exchange rate down to 127 in 3 months. By November 2023, we were back at 152 and they intervened again. Meaning, the first intervention "worked" for about a year, from October 2022 to November 2023. The second intervention "worked" only for 4 months. By the beginning of April this year, we were back at 152 again, and moved to 160 by the end of the month.

The last intervention was at 160, and it appears we are back at 160, or just about, on Friday, pending what happens today. So this interventioned "worked" for less than two months. Also keep in mind that these interventions have cost more money each time. The BoJ is losing. Its interventions are getting less effective, and more expensive, just like any drug habit tends to do over time. This is what systems collapse looks like.

We could break through 160 this week, which would force the BoJ to intervene again, but how much more can they? Yes they can sell dollars if they have them, but can they really sell Treasurys for dollars to sell dollars to buy yen?