Following U.S. Treasury Secretary Scott Bessent's expression of concern this week about the potential spillover of Japanese market turmoil into the United States, the U.S. Treasury Department initiated preliminary steps for foreign exchange intervention on Friday. Two individuals familiar with the matter disclosed that the New York Federal Reserve, acting on behalf of the Treasury, inquired with several banks about the cost of exchanging yen for U.S. dollars. This unusual move prompted a significant rebound in the yen's exchange rate. Exchange rate movements influence bond yields, and Bessent pointed out this week that rising Japanese government bond yields are one factor driving up U.S. government borrowing costs. The Trump administration has consistently aimed to lower U.S. Treasury yields—the benchmark for pricing various consumer and corporate borrowing costs. Reducing borrowing costs is also one of the recent measures introduced by the current administration to enhance the purchasing power of American citizens. The New York Fed's exchange rate inquiries on Friday served as a signal to traders: the Treasury might be preparing for large-scale purchases of yen. Although the Treasury ultimately did not intervene, the anticipation of potential substantial foreign exchange buying still drove the yen up by 1.6% against the dollar, marking its largest single-day gain in nearly six months. Since April this year, the yen has depreciated by a cumulative 13%. Concurrently, Japanese borrowing costs have also risen, a trend that intensified this week as investors raised questions about the country's fiscal discipline. Investors and analysts remain skeptical of Japanese Prime Minister Sanae Takaichi's decision to call an early general election and her costly pledge to reduce the consumption tax. The Bank of Japan also explicitly stated in its recent monetary policy meeting that yen depreciation now poses a risk to the domestic economy. However, some analysts expressed a degree of puzzlement over the U.S. Treasury's action—historically, interventions to stabilize the yen have been led by the Bank of Japan, with the U.S. Treasury rarely stepping in to manipulate the foreign exchange market. Ed Hussein, a rates strategist at Columbia Sage Asset Management, commented, "Direct intervention in the foreign exchange market by the U.S. Treasury is extremely rare, and taking such action at this juncture seems particularly unusual." Neither the U.S. Treasury Department nor the White House responded to requests for comment. Hussein further noted that there is currently no clear evidence indicating that the Japanese government bond market, which is significantly smaller than its U.S. counterpart, is exerting an influence on America. He stated, "Concerns that volatility in Japanese interest rates will spill over into the U.S. Treasury market lack a solid foundation." Although the U.S. government seldom employs such intervention measures, since assuming the role of Treasury Secretary, Bessent has pursued a more activist approach to exchange rate policy. Last year, when Argentina's economy was in turmoil, Bessent spearheaded a central bank currency swap agreement and utilized the Treasury's Exchange Stabilization Fund to purchase Argentine pesos. He revealed this month that the U.S. has recovered the funds involved, and the operation even generated a profit for taxpayers. Bessent, a former hedge fund manager, built his reputation in finance through large-scale currency bets. In the 1990s, he famously wagered $10 billion against the overvalued British pound, a series of aggressive trades that severely challenged the Bank of England and earned him fame for his role in "breaking the Bank of England." In 2013, he again secured a net profit of $1 billion for the fund he worked for, this time by betting on the Japanese yen.