Treasury Secretary Bessent sought to aid Japan in propping up the yen, so he decided to let the media "accidentally" catch a glimpse of his notebook. Among the to-do items listed was a plan to buy up to $10 billion worth of yen. This unorthodox strategy has become a hallmark of Bessent's distinctive style. On Wall Street, he once pocketed a $1 billion profit from a massive currency bet. After becoming Treasury Secretary, he extended a helping hand to Argentina with a swift move. Now, he has come to the aid of another US ally, Japan.

The United States and Japan have jointly intervened to support the yen for the first time in nearly three decades. Beyond signaling through his notebook, Bessent has also deployed a series of unexpected tools, such as utilizing US-held euro-denominated assets and publicly referencing a Federal Reserve financing facility available to Japan. So far, the intervention has shown positive results, with the yen rebounding from four-decade lows, though traders are now focused on how long this rally can last. Bessent signaled further action on Tuesday, stating that the yen's weakness has increased the risk of a broader depreciation across Asian currencies.

If these moves reflect a more proactive economic diplomacy, it may be linked to Bessent's professional background. Recent Treasury Secretaries, including Henry Paulson and Robert Rubin, who were executives at Goldman Sachs, largely came from the so-called "sell-side" of finance, focusing on risk management. Bessent, in contrast, brings decades of experience from the hedge fund industry. "We've never really had a buy-side person," said Stephen Myrow, managing partner at Beacon Policy Advisors and a former Treasury official. "He acts more like a macro trader than a traditional Treasury Secretary."

Bessent outlined his economic philosophy in a speech to the Economic Club of New York in June. In practice, part of this philosophy involves supporting countries willing to coordinate with Washington, aligning with US interests. On Sunday, President Trump, when discussing the intervention to support the yen, said the US would derive "financial benefits" from it, though he did not specify what they were. Bessent expressed concern that volatility in the Japanese market could spill over into the US Treasury market. Both emphasized the importance of the US-Japan alliance.

Bessent confirmed on X (formerly Twitter) on Sunday that the US and Japan had jointly intervened in the market to support the yen, stating that "the Trump administration will support the trusted partners of the United States." This joint intervention came after Bessent, during a cabinet meeting on Friday, effectively allowed reporters to see his notebook, which included a to-do item to buy yen. In an interview on Tuesday, Bessent said, "I just wanted to make sure reporters who were looking over my shoulder also knew that 'JPY' is the code for the yen." He also confirmed that the US had used euros, which analysts say may have been to limit downward pressure on the US dollar.

A hedge fund trader can quickly exit a position after a successful bet and pocket the profits, but such an option may not be available to a Treasury Secretary. Bessent's bet on Argentina last year paid off when Javier Milei, an ally of President Trump, unexpectedly won the legislative election. Now, Bessent has tied part of his personal credibility to the yen's trajectory. Despite recent support, the yen remains vulnerable to investor concerns about Japan's fiscal policy and the slow pace of interest rate hikes by the Bank of Japan.

Chris Turner, global head of markets at ING, said that looking at the cases of Argentina and now Japan, the Treasury Department appears to be increasingly willing to use its Exchange Stabilization Fund to support broader economic and geopolitical goals. Turner noted that this marks a significant shift in US foreign exchange policy compared to the relatively passive stance of the past two decades. Bessent's willingness to take risks is linked to his standing within the Trump administration. On Tuesday, Trump watched as Bessent presided over the swearing-in ceremony for new Director of National Intelligence Jay Clayton. On Wednesday, Bessent will travel to Arizona with Speaker Mike Johnson to promote the administration's achievements ahead of the midterm elections.

According to sources, despite Bessent and Commerce Secretary Howard Lutnick having competed for the Treasury Secretary position, Bessent kept Lutnick informed about the discussions on US intervention in the yen after Lutnick missed the cabinet meeting on Friday due to other commitments. Bessent has made it clear that he views the assistance to both Argentina and Japan as having broader strategic significance. In the case of Argentina, he emphasized last year that a victory for Milei in the election could further boost the rise of center-right political forces in Latin America. Subsequently, conservative leaders won presidential elections in Colombia and Peru. On Tuesday, Bessent said regarding Japan that the yen's weakness not only poses a challenge to Japan's inflation "problem" but is also detrimental to many other Asian currencies. "If the yen depreciates significantly, other currencies will follow suit," he said.

Familiar with Japan

Bessent is very familiar with Japan. He has visited Japan over 50 times, including three visits as Treasury Secretary. In the early 2010s, he traveled to Japan almost every month to better understand the local situation. His former boss once made over $1 billion by betting on the yen's decline. At that time, former Japanese Prime Minister Shinzo Abe was implementing reform measures to push the economy out of deflation. Bessent has been actively following Japanese economic affairs and works closely with his Japanese counterparts, including Finance Minister Kozu Satsuki and Bank of Japan Governor Kazuo Ueda, whom he calls an old friend. Bessent once worked with the famous hedge fund trader Stanley Druckenmiller, who later became a mentor to current Federal Reserve Chairman Kevin Warsh.