The US involvement was driven by a desire to prevent Japan from disruptively selling large amounts of US Treasuries, which would have caused volatility and upward pressure on US interest rates. The goal was to maintain stability in US markets, not just to aid an ally.

The US-Japan yen intervention wasn't about establishing an unbreakable price cap. Instead, its primary goal was psychological: to make speculators nervous about shorting the yen near the 160 JPY/USD level, thereby restoring the Ministry of Finance's perceived threat.

Japan's Ministry of Finance (MOF) tactically delayed its yen-buying intervention. Instead of acting when the yen first weakened, it waited for the broad US dollar sell-off following the FOMC meeting. This allowed them to amplify an existing trend, maximizing the intervention's effectiveness and market impact.

The little-known FEMA repo facility allows foreign central banks to post US Treasuries as collateral to get dollars. This lets countries like Japan intervene in FX markets without fire-selling their bond holdings, thus mitigating stress on the US Treasury market.

The US Treasury's intervention was not just about the Yen's exchange rate or trade balance. A primary motive was to prevent Japan from being forced to sell its vast US Treasury reserves to fund its own intervention, which could create significant pressure on the US bond market.

The Bank of Japan's intervention is a defensive measure, not an offensive one. It aims to prevent an explosive, out-of-control yen depreciation (the 'right tail' risk) and buy time, hoping the underlying macro picture (like U.S. yields) eventually changes in its favor.

The US coordinated with Japan on currency intervention not just to support the yen, but as a strategic move to manage US long-term interest rates. The Treasury believes excessive dollar-yen volatility spills over into Japanese Government Bond (JGB) yields, which in turn significantly influences the long end of the US Treasury curve, making yen stability a tool for domestic rate management.

The Treasury's push to help Japan defend the yen is not altruism; it's a strategic move to protect the US bond market. By preventing Japan, the largest holder of US debt, from selling treasuries, the US maintains global demand for its own debt and keeps its borrowing costs low. The support for Japan is merely a convenient side effect.

Unusually, Japan's Finance Minister discussed using the Government Pension Investment Fund (GPIF) to buy domestic assets. This could be a 'quasi-intervention' to strengthen the Yen and cap JGB yields, potentially shifting 12 trillion yen without formal policy changes, creating a significant risk for Yen bears.