The Fed’s FIMA repo facility lets foreign central banks pledge their Treasuries for overnight dollars instead of selling them — dollars for intervention without adding Treasury supply to the market, so US yields don’t move. The stock stays off the market; only the need for a flow is met (the benign mirror of Stock vs flow repricing).
The 08/2026 yen-defense episode is the specimen. Japan holds ~$1.1T USTs; defending the yen burns dollars, and once cash reserves run out, the next dollar comes from selling bonds — which would push the 10y (already >4.7%) higher. Hence Bessent asking the Fed to expand FIMA (capped ~$60B/day vs an estimated $60–80B spent in one week — expansion needs an FOMC vote, and the Fed declined comment), and hence the US selling euros rather than dollars to support the yen, shifting the pressure onto Europe.
Why the US bails out its creditor (ekwufinance’s framing): BoJ’s own options are to sell USTs (US yields up via supply) or hike rates (US yields up via carry-trade unwind) — both bad for Washington, so the “bailout” is self-defense. Lacalle adds the political layer: every central bank may dump Treasuries to defend its currency and it’s “prudent”; when the US intervenes for the same reason, it’s a scandal. Note who’s arguing: all three accounts sell macro-doom subscriptions, but the mechanism is standard plumbing.
The tool spreads: the ECB is expanding its own repo facility for foreign central banks (ekwufinance, 08/2026, https://x.com/ekwufinance/status/2087169196706730488) — pledge EU bonds for euros instead of selling them, the same keep-the-stock-off-the-market plumbing applied to Bunds and BTPs as their yields sit at multi-decade highs. ekwufinance reads the pattern as the developed world’s path to yield-curve control (“we all don’t own enough gold” — the same sales line as ever), but the observable fact is narrower: both reserve currencies now operate a sell-nothing liquidity window.