Odd Lots · Thursday, August 6, 2026
Brad Setser outlines the US Treasury's traditional concern that a weak yen grants East Asian producers a trade advantage over American manufacturers, particularly in the automotive sector. Secretary Bessett has also emphasized avoiding broader destabilization in the Asian currency complex and potential pressure on the US Treasury market.
“Well, I think the classic concern, which hasn't been the concern that Secretary Vestin has articulated, is that extreme weakness in East Asian currencies gives East Asia a trade edge over American producers. I mean, classically, a week end is bad for Detroit, A weak Korean land is bad for Detroit. Right, it's really you know, the traded goods pressure, most classically through the automotive sector, that has been the traditional driver of this.”
“That hasn't been what Bestin has emphasized. He's emphasized well, the weekend is putting pressure on the wand is adding to the generalized malaise bizarreness where good news is bad news for a lot of Asian currencies. And then and there's a sense that this could create pressure on the treasury market.”