Scenario · 7 September 2026 · Universal Asset Owners
Base case. August was a one-month event. Reserves stabilise near .2tn in September, foreign-official Treasury holdings resume their prior trend, and the correlation between reserve-manager activity and long-end US yields stays inside its two-year range.
Escalation triggers
- A second consecutive monthly reserve decline in the MOF’s early-October release.
- A rise in the deposit/repo share of reserves against foreign securities — funding rather than sales.
- TIC data showing a net decline in Japanese official holdings of US Treasuries for the same reference month.
- A second joint US–Japan operation. The 1998 precedent was not repeated for 28 years; twice in one quarter would be a regime change.
- Korea’s NPS reactivating its hedging programme, indicating the won has turned back.
De-escalation triggers
Yen sustained stronger than 150 without intervention; the MOF reporting no August-style operation in September; reserves recovering above .25tn.
Update rule: re-scored on the MOF monthly reserve release and the TIC release, not on daily FX moves.
No probability is published for this scenario. The desk has no defensible method for one, and a number without a method is decoration.