Can governments really control financial markets, or can they simply delay the inevitable?
Japan has spent nearly $100 billion trying to support the yen, with the US taking the extraordinary step of joining the intervention. But despite the firepower, the forces driving the currency, interest rate differentials, the carry trade and Japan’s economic fundamentals, haven’t simply disappeared.
In this episode, Anthony Cheung and Piers Curran explain how FX intervention actually works, why governments and central banks step into financial markets, and why intervention often treats the symptom rather than the underlying cause.
We also revisit the extraordinary 2015 Swiss franc collapse, when the Swiss National Bank abandoned its currency floor and triggered one of the most dramatic moves in modern FX history, before looking at the US Treasury market and the attempts to bring rising long-term bond yields under control.
From the Japanese yen to US Treasuries, this is a practical guide to what happens when governments decide to fight the market and why the market often has the final say.
(00:00) Can Governments Control Markets?
(07:26) Why the Yen Is So Weak
(15:24) The Yen Carry Trade
(17:59) The Intervention Explained
(19:41) Symptom or Disease?
(21:14) Japan’s $100bn Intervention
(27:11) The Swiss Franc Collapse
(41:10) The US Bond Market Problem
(45:51) What Could Break Next?
(52:49) What Happens Next?
