Dorothy

Bessent is walking a scary tightrope. Bond vigilantes pounce when they see weakness, and that includes interventions by policy makers like Bessent; the treasury secretary has also also taken steps to prop up the yen to prevent Japanese holders of US debt from selling.

In his op-ed, Druckenmiller tore into Bessent’s plan to “at least double” government buybacks – potentially passing the $4 billion mark – in an effort to ease soaring Treasury yields and lower borrowing costs for consumers.

Bessent's initial plan was to double Treasury's usual $2 billion buybacks of off-the-run — or previously issued — securities, a program begun two years ago under his predecessor, Janet Yellen.

Now Druckenmiller is invoking the same logic against Bessent, who has crossed from the trading desk to the Treasury Department. He used the Wall Street Journal opinion page to call out his former protege. But, perhaps unprecedentedly, he did so with an AI-assisted essay. Jeff Stein, the Pulitzer-winning former chief economics correspondent for the Washington Post, wrote on X that he contacted Druckenmiller, who responded “of course” he used AI to write the essay: “There’s a reason I moved from an English major to being an economics major. I’m not embarrassed by it.” Druckenmiller could not be immediately reached for comment by Fortune. The Treasury Department did not respond to a request for comment.

The Treasury Department announced on Aug. 19 that it would double the size of its long-dated bond buybacks, from $2 billion to at least $4 billion per operation, aimed at the 10- to 30-year sector and running from Sept. 9 through Nov. 4. The announcement came after the 30-year yield touched a 19-year high. Yields fell within minutes. By the next afternoon they had round-tripped to levels above where they started. The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management—and a mistake far larger than $4 billion suggests. Read Full Article »