Today’s briefing:
— Guess who’s bossing Japan
— A spy shootout in the streets
— A top-secret cookbook
Your Insider’s briefing:
— Guess who’s bossing Japan
— A spy shootout in the streets
— A top-secret cookbook
Good morning {{first_name | Intriguer}}. I must be the only 40-something Westerner who’s not “just back from Japan” and now sniffing around for any crack in conversation to ram through “how quiet the trains are”.
Instead, the Intrigue team and I have been at our desks getting you this briefing on why Scott Bessent is leaning so hard on the Bank of Japan. It’s a cracker.
But to manage the Tokyo FOMO, we cranked endless, synth-soaked Japanese city pop like we were in the back of a white Toyota Crown at 3am with a FamilyMart coffee and no voice, full 1982 Sony ad energy.
So crank up Mariya Takeuchi’s Plastic Love and read on.
 | Managing Editor Jeremy Dicker |
🙋 Our next Ask Intrigue Anything session is coming — drop your questions here and our team of ex-diplomats will answer as many as we can!
PS — Monday is Labor Day in the US but we’ll be back Tuesday!
Date of the day
9-10 September
That’s when France will host its first ‘International Space Summit’ for governments and companies. Intriguingly, DC is urging US firms not to attend, citing what it describes as France’s anti-competitive practices, China’s presence at the event, and the US reportedly not getting a say in the summit agenda.
Unbreakable bond.
Kazuo Ueda, Bank of Japan chief, and Scott Bessent, US Treasury Secretary.
If you’ve been feeling a little micromanaged at work lately, well congratulations on your career in diplomacy.
But also, spare a thought for Kazuo Ueda, Japan’s central bank chief now getting publicly coached by US Treasury Secretary, Scott ‘Scotty from Finance’ Bessent.
Scotty started out vague on Sunday, simply assuring journalists the Bank of Japan would “do the right thing”. What is that — recycle? Drink more water? Digital detox?
He then hinted “we probably reached the end of Abenomics, which was a reflationary program”. Oh…
Just in case Ueda still wasn’t picking up what Scotty was putting down, he winked, “I have information the market doesn’t have” 💅 and “it’s my belief that the Japanese government and the BOJ will do the things that will lead to a stronger yen”.
Or to put it another way? Scotty is pushing Ueda to raise rates. More precisely, he’s setting a market expectation that Ueda will raise rates — then if Ueda doesn’t, his credibility cracks, the yen keeps falling, and his next rescue just gets costlier.
So, why is Bessent all up in the BOJ’s business?
First, Japan is the world’s yield anchor: decades of near-zero rates have made the yen a low-cost piggy bank for investors to borrow in Tokyo then chase returns elsewhere. If the yen gets too wild, those loans can blow up, and fund managers have to sell US assets to cover their yen tabs, harming US valuations. Scotty don’t like that.
Second, Japan is also America’s top landlord, holding $1.1T in US Treasuries. If Tokyo has to keep manually defending (buying) its currency instead of hiking rates (to attract more market buyers), that’d mean Japan dumping more US Treasuries to raise more cash to buy more yen, spiking US borrowing costs. Scotty don’t like that.
So okay… but why is Bessent all up in the BOJ’s business… now?
First, he and Tokyo actually pulled off a rare joint FX intervention in July, buying up yen to boost it. This gave the currency a brief sugar hit but it then collapsed right back near 40-year lows, where import costs get brutal, and short-sellers smell blood.
So in practice, that means Scotty from Finance just burnt a pile of cash on an intervention that didn’t even work. And Scotty don’t like that. He’s not writing another check.
Second, Japanese bond markets are now doing Scotty’s pressuring for him, with the 10-year yield hitting 30-year highs of 3% earlier this week — ie, pricing in a BoJ hike.
And third, the BoJ’s next rates meeting is coming up on September 17-18, so that’s why Scotty is weighing in now — do the right thing Ueda, or markets will punish you.
But to be clear, Scotty isn’t playing central bank life-coach out of goodwill here.
He is — like anyone from Finance — completely self-interested: in pushing Ueda to hike, he’s hoping to avoid more market volatility, wasted cash, dumped US Treasuries, higher US borrowing costs, and a low yen pricing out US exports.
So will Ueda do the right thing by Scotty? We’ll find out on the 18th.
Intrigue’s Take
To be clear, a rate hike on the 18th would be a nice little headline for Scotty, but it wouldn’t be a cure. He’s…
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Intrigue’s Take
To be clear, a rate hike on the 18th would be a nice little headline for Scotty, but it wouldn’t be a cure. He’s treating the yen like a comms problem: let’s just box Ueda in, then let the market handle the rest.
But Japan isn’t stuck in a low-rate trap because Ueda is stupid or lazy. Dude is a razor-sharp workhorse.
So sure, Scotty’s comms strategy might work for a meeting, but beyond the US-Japan rate gap, it doesn’t really unwind the factors trapping Ueda in the first place: debt, demographics, productivity, manufacturing, and an energy bill that has to be paid for in dollars.
Zoom out a little further, and Japan is merely having the loudest — not the only — bond tantrum right now: British Gilts, US Treasuries, French OATs, German Bunds? They’re all having a moment as markets reprice jitters around inflation, wars, deficits, and the fact tech tycoons are now cannon-balling into debt markets to finance their own epic AI spending. Or to put it another way, bond markets are just reacting to the fact that the price of money is up because more folks want to borrow.
But even this isn’t capturing the whole picture. You sometimes hear a bit of nostalgia about the 1985 Plaza Accord that got five finance ministers in a New York room (US, Japan, Germany, France, the UK) to help push the yen and Deutschmark higher so US exports could get some breathing room. But they were friends and allies, controlling enough of the world’s levers to go ahead and ‘do the right thing’.
These days, the other surplus that matters (trade) is China’s. And something tells us the people’s central banker (Pan Gongsheng) isn’t about to crowd into a Manhattan hotel and take Scotty’s orders to strengthen the yuan.
Sound even smarter:
The last time we saw a joint US-Japan intervention (via the G7) was to weaken the yen after the Fukushima disaster of 2011.
Bessent foreshadowed an initial $5-10B move to support the yen back in July, but it appears the US only put up $500M in the end. Classic jawboning.
The yen jumped 0.9% on Wednesday amid all the impending-hike drama.
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Meanwhile, elsewhere…
🇺🇦 UKRAINE — Internecine fighting.
A shootout between Ukraine’s SBU (domestic intelligence) and HUR (military intelligence) has left three wounded on the streets of Kyiv, after the SBU detained an HUR-protected senior Russian fighting for Ukraine. President Zelensky, already fending off political challengers and corruption scandals, has sacked a senior SBU officer and called the incident “absolutely shameful”. (RFE/RL)
Comment: Two separate agencies with two separate missions: the SBU hunts spies, while the HUR runs anti-Kremlin Russian units that fight for Ukraine. Not the first country to struggle with coordinating its spooks, but nobody needs dysfunction under the hood while a common enemy attacks.
🇳🇱 THE NETHERLANDS — Goldfinger.
The Dutch central bank has shifted 86 tonnes of gold out of New York and Ottawa to London, citing “increasing geopolitical unrest”. (Guardian)
Comment: We know a Jason Statham plot when we see one, though the Dutch executed two-thirds of this transfer via sales and repurchases rather than full-blown gold ships. The idea is that gold can be more rapidly deployed from London in a crunch. But when the Dutch start moving gold away from the US, there’s clearly a subtext around US political risk, and plenty in Europe are now openly turning that subtext into text: whether it’s unpredictable electoral cycles or weaponised sanctions, maybe European central banks don’t have the same faith in the US as a risk-free vault.
🇨🇺 CUBA — Is Raúl dead?
Rumours are swirling through Miami’s exile community and Havana’s diplomatic corridors that 95-year-old Raúl Castro is on life support or dead. The regime isn’t commenting. (Miami Herald)
Comment: While we await any kind of verification, consider it a reminder that in a system this personalised, the health of a 95-year-old Castro is a big succession story, particularly amid continued US pressure.
🇪🇸 SPAIN — The report he didn’t want.
Tens of thousands have marched calling for the nation’s shockingly handsome leader (Pedro Sánchez) to resign over July’s migrant crisis in Ceuta. The immediate trigger appears to have been a leaked internal report citing evidence that Moroccan border authorities showed “total permissiveness”. (BBC)
Comment: The spicy thing about this report isn’t that it aligns with what we’ve flagged all along (Morocco might’ve been retaliating for Spain’s rapprochement with rival Algeria), or even what the would-be migrants themselves told international outlets (“they waved us through”), but that it all clashes with Sánchez’s own narrative that Morocco’s hands are clean. Spain’s opposition is now openly fanning the theory that, after Morocco hacked Sánchez’s phone in 2021, it started blackmailing him with whatever they found, forcing Sánchez to trade away decades of neutrality on Western Sahara and back Morocco’s territorial claims. Fanciful or not, after years of corruption scandals, Sánchez is under serious pressure.
🇪🇺 EUROPEAN UNION — Running on empty.
With winter approaching, Europe’s natural gas reserves now sit at just ~65% capacity, one of the lowest seasonal levels on record. (WSJ $)
Comment: One issue seems to be that firms delayed restocking on a bet that the Iran war would subside, Hormuz would reopen, and Qatar’s LNG would get cheap again. That bet is now souring, with Europe’s spot prices back to 3.5-year highs as the continent bids against Asia.
🇷🇸 SERBIA — Spyware on campus.
A report by digital rights group SHARE alleges authorities used military-grade spyware to hack at least 14 Serbian students and activists ahead of elections earlier this year. A key bit of evidence is that the hacking sometimes occurred after police took the phone into custody! (FT $)
Comment: When a regime starts using cyberweapons usually reserved for cartel bosses on undergrads instead, it’s rarely a sign of quiet confidence after years of persistent public protests against President Vučić.
🇳🇬 NIGERIA — Mid-ride, no ride.
After more than a decade of ride-hailing, US tech giant Uber has suddenly halted ops in both Nigeria and Uganda, citing a global review that recommended a refocus elsewhere. The company unveiled its new London robotaxis the next day. (AllAfrica)
Comment: Uber’s statement denies this having anything to do with recent confusion about the Uber rules across Nigerian airports, though that’s little consolation for the many drivers and riders who were apparently mid-ride when the service halted! Either way, it’s a win in Africa’s most populous nation for Uber’s Estonia-based rival Bolt.
Extra Intrigue
Meanwhile, in other worlds…
Tech: China-based chipmaker YMTC is hoping to raise $4.9B in a Shanghai initial public offering, following a monster debut by rival CXMT.
Sports: The 6th World Nomad Games have opened in Bishkek, competing in 43 disciplines rooted in Central Asia's ancient nomadic cultures.
Diplomacy: EU ministers are debating whether to fold the EU’s diplomatic service into the Commission (per a French/German push), or just do a better job at enforcing the rules (per the EU’s current top diplomat, Kaja Kallas).
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Cookbook of the day
Front and back pics courtesy of eBay
Most cookbooks promise quick weeknight meals or maybe a weekend party flex.
Today’s cookbook does that too, but sprinkles in, you know, some casual tips on how to source langouste à la maison amid Mekong mortar fire, or what to serve when your guest is the notorious head of SAVAK (pre-revolutionary Iran’s secret police).
That’s because Spies, Black Ties, & Mango Pies (1997) is the official CIA cookbook put together by Langley’s family support network for the Agency’s 50th birthday, compiling 160+ recipes from CIA officers and their families stationed abroad.
Sure, the recipes are good, like the sophisticated Chinese appetizer shared by none other than Barbara Bush (George was CIA boss). But the real dish is the anecdotes: serving cuy (guinea pig) to the Soviet ambassador’s wife, having to swap beef for rat in a safe-house, and a spook dishing up a flambé that sets a contact’s napkin on fire.
You’d think maybe a CIA cookbook on the kitchen shelf might blow your cover, but not enough to stop the spooks publishing a sequel in 2009.
Today’s poll
Do you think Bessent is overstepping in telling the BOJ to hike rates?
Yesterday’s poll: Germany's response to Russia's drones at Leipzig airport is...
⚖️ Proportional (36%)
🔥 Provocative (4%)
🥱 Passive (59%)
✍️ Other (write in!) (1%)
Your two cents:
🥱 D.D: “If Putin doesn't get burned, he'll keep reaching for the stove.”
⚖️ S: “This isn't time for a willy-waving contest.”
✍️ R.C.O: “Both passive and proportional, as Germany attempts to avoid provocation while navigating a VERY uncertain NATO situation.”
PS — quick shout-out to ‘OM’ for today’s No country for old yen subject line 😂. Become an Insider and join the chat!