The joint U.S.-Japan support of the yen is unusual. The way it is being financed is unprecedented, and adds liquidity when the punch bowl of the U.S. economy and markets is already overflowing. Scott Bessent's trade has drawn scrutiny for its structural implications.

Put simply: America is printing dollars so Japan can buy yen. It isn't quite quantitative easing, because the Federal Reserve is lending Japan money in return for temporary ownership of Treasurys in repurchase agreements, rather than outright buying the Treasurys. This mechanism circumvents traditional swap lines.

But like QE it expands the Fed balance sheet and pumps billions of dollars into the economy. The way it's being done should make us worry that the Fed is being roped into easing monetary conditions when it should be moving to tighten them. The U.S. and Japan coordination marks a shift in currency intervention policy.