Bloomberg Surveillance TV: August 3rd, 2026

**Jonathan Ferro** (0:02)
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**Jonathan Ferro** (0:11)
This is the Bloomberg Surveillance podcast. I'm Jonathan Ferro, along with Lisa Abramowicz and Annmarie Hordern. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9 AM Eastern.
Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business app. Jeremy Stretch of CIBC writing, compared to the April May interventions, the latest round arguably carries more weight because of the coordinated moves by the US Treasury. Jeremy joins us now for more. Jeremy, there are some underlying problems in Japan. There is a term of trade shock and welcome to the program, buddy. It's always good to see you. Good morning. You're facing a terms of trade shock. The oil is contributed to.
You've got deficit issues as well. A massive rate differential with the US. Why does this intervention help them fight those three?

**Jeremy Stretch** (1:06)
Well, indeed, you are talking about, in effect, a containment policy. Because unless the oil price is going to come down materially, or unless the interest rate spread between the US and Japan closes exponentially, and that would imply that the BOJ would have to bring forward, not only bring forward their policy timing, but be more aggressive, and perhaps the market re-priced the Fed expectations, it is seemingly more of a containment issue. But I've just been listening to great interest to your discussion with Lisa regarding the holdings of treasuries by Japanese investors. And I think that is particularly notable. I think that twist steepening that we did see in terms of the US curve after last Wednesday's Fed decision, I think, was also notable. And I think if we go back to Liberation Day in the post-Liberation Day period, it was the discipline of the bond market that really exercised control on the politicians. So I think it is that sort of bond market dynamic that I think is proven to be contingent here in terms of this broader narrative regarding the Dolly End Exchange Act.

**Jonathan Ferro** (2:02)
Jeremy, just to take that a step further, how much is the timing kind of predicated on the move that we saw following the Wednesday Fed press conference?

**Jeremy Stretch** (2:10)
Well, certainly, I think the two are not inconsistent in terms of the timing dynamic. So, we have seen obviously a consistent grind higher, or we had seen a consistent grind higher in Dolly End through the month of July. But clearly, that risks, you know, there was an increasing degree of concern or destabilization perhaps in the bond space after that Fed decision. So, I think that did amplify concerns. And in a sense, it is an opportunity to, you know, to try and hit a market, which is very extreme in terms of its positioning. I think it was very notable that if you look at yen short positions, they were the most extreme in two years and indeed, were pretty close to the levels that we haven't seen since 2007 So, the market was pretty stretched. There was a degree of volatility or a degree of uncertainty, which had been unleashed in terms of the treasury curve, in particular after the Fed guidance narrative. So, I think those two things certainly coincided to provide perhaps a fertile ground into the month end for the authorities to try and come in and hit a market which had been heavily skewed in one direction.

**Jonathan Ferro** (3:13)
This is incredibly rare, Jeremy. We were talking about how the last time there was some sort of bilateral coordinated currency intervention was 2011 One at the time, a number of nations coordinated with Japan to help depreciate their currency. Then before that was 2000, when the US and a group of other nations helped support the newly formed Euro when it was depreciating. Do you think that interventions like this are going to become more frequent given what we're seeing now with Japan, given what happened with the credit line to Argentina, given some of the rhetoric that we're hearing out of the Trump administration?

**Jeremy Stretch** (3:44)
Well, again, I was listening to your discussion earlier when you were talking about free and fair markets. In a sense, that does beg the question that intervention or the prospect of intervention certainly creates uncertainty regards the sort of the free-floating nature of both currencies, but also the free flow of information and the market reactions accordingly from that. So I think there are degrees of concern in relation to the current environment. And I think there is going to be increasing skepticism as to whether there will be some degree of increase in official action going forward, and that could create additional pockets of volatility and or uncertainty. And I think that's the subtext here. And I think it's quite interesting to tie this with the forward guidance, debate and discussion that you've been having for some time and in relation to Mr. Walsh and etc. I think we have to remember that we are in a new world, or at least for many market participants in a new world, because I've unfortunately been around more than long enough to remember pre-forward guidance, and perhaps many in the market have yet to understand the ramifications and the uncertainties that could come with that.