The numbers come first. Just two weeks after releasing its buyback schedule, the Treasury Department announced it would 'at least double' its planned purchases of outstanding 10-year to 30-year debt. The move is the latest in a string of market maneuvers by Treasury Secretary Scott Bessent that have surprised investors and, in at least one case, a former Japanese official.
On July 31, Bessent oversaw the first purchases of yen by U.S. authorities in three decades — an action seen as reducing the need for Japan to sell down its Treasuries stockpile to fund its own yen buying. Earlier this month, the Treasury opened the door to potential cuts in issuance of longer-dated debt. And early this year, Bessent deployed so-called rate checks — calls by authorities to banks for quotes on the yen.
'He's activist, absolutely,' said Mark Sobel, a former U.S. Treasury official now at the research group OMFIF. 'It harkens back to his hedge-fund background.' Sobel added: 'It seems clear to me that he and the administration are concerned about the rise in long-term yields.'
The 10-year Treasury yield has climbed above the level it stood at before President Trump returned to office, driven by a combination of inflation concerns, Federal Reserve policymaking and outsize fiscal deficits. Elevated yields have kept mortgage rates high and pose a headwind to economic growth ahead of the November congressional election.
The intervention cuts against a principle the Treasury has long upheld — being 'regular and predictable' and not surprising investors. Bessent himself endorsed that concept in a keynote speech at a Treasury market conference in November, but he also said in that same speech: 'My job is to be the nation's top bond salesman. And Treasury yields are a strong barometer for measuring success in this endeavor.'
'It is going against regular and predictable — but that's the world we live in,' said Gregory Faranello, head of U.S. rates trading and strategy at AmeriVet Securities. 'The messaging is clear: stop the rise in yields.'
The irony is not lost on observers. Bessent was among Republicans who criticized his predecessor, Janet Yellen, for moving to stanch a yield rise in 2023 via the regular quarterly debt-issuance statement, calling it politically motivated. Stephen Miran, President Trump's former chief economist, had co-written a paper in July 2024 warning against 'activist Treasury issuance,' arguing that 'once one political party begins using ATI to stimulate the economy into election season, it may be used repeatedly by all future administrations.' Miran's co-author on that paper was Nouriel Roubini.
Brad Setser, a senior fellow at the Council on Foreign Relations, put it plainly: 'This is not an administration that sets stable rules and then lets the market chips fall where they may.'
CEO Times editorial read: The bond market is sending a signal Washington cannot ignore — deficits have consequences, and yield curves do not negotiate. Bessent's activist turn is a pragmatic response to a fiscal reality that predates this administration, and his hedge-fund instincts may well succeed in buying time. But free-market principles demand an honest accounting: the surest path to lower long-term yields is a credible plan to shrink the deficit, not a Treasury desk playing bond salesman. Capital rewards clear rules. The more the rules bend to short-term yield management, the steeper the credibility premium the market will eventually demand.
