Japan Has a Pile of Dollars It Can Tap Before Selling Treasuries

The risk of Japanese currency intervention spilling over and causing undue disturbances in an already under-fire US Treasury market is smaller than it once was thanks to tools that the Federal Reserve now has in place to make sure the market has enough dollars and places to park them.

Japan on Thursday intervened to prop up the yen for the first time since 1998 and to do so it had to get its hands on dollars to sell. Once upon a time it might have needed to liquidate Treasuries to raise the requisite cash -- but that’s not necessarily the case any more.