Bessent's Bond Market Interventions Spark Debate Over Long-Term Yields
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That, in turn, has caused a sharp spike in both 10-year and 30-year yields (the 10-year yield hovering around 4.7% and the 30-year comfortably above 5%), prompting Bessent’s recent actions to support bond prices.
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CNBCLong-duration bonds are bearing the brunt of a near year-long rise in yields that extended to 19-year highs in the 30-year last week after Treasury Secretary Scott Bessent upped the government's bond buyback. The 10-year note yield however, is still under its high from January 2025 and the 5% level it pierced in 2023.
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Treasury Secretary Scott Bessent's bond market interventions have generated a modest decline in yields along with a growing chorus of derision from those who think they won't work over the long haul and could have dangerous repercussions.
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MarketWatchTreasury Secretary Scott Bessent’s recent maneuvers in the bond market have come in for some searing criticism from illustrious investor Stanley Druckenmiller — his long-time ally and mentor.
New York Post BusinessTreasury Secretary Scott Bessent is determined to put the “fear of God” into the so-called “bond vigilantes” who have been dumping US Treasurys and sending interest rates soaring, according to a private sector economist with knowledge of his thinking.
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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.
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CNBCBessent has proposed at least doubling the department's buyback efforts for longer-dated debt issues. Treasury also intervened in currency markets in late July to support the yen so the Bank of Japan didn't have to sell Treasurys, which likely would have raised yields on U.S. debt.
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"If the 30-year must trade at 5.5% to clear, that isn't a crisis. It is an invoice," he wrote in a Wall Street Journal op-ed piece. "Then do the only thing that durably lowers long-term yields: address the primary deficit."
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MarketWatchDruckenmiller: ‘If the thirty-year must trade at 5.5% to clear, that isn’t a crisis: it’s an invoice’
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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.
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CNBC'A subsidy to procrastination' In the essay, titled "Let the Bond Market Speak," Druckenmiller urged Bessent to abandon the buyback scheme announced Aug. 19 and allow the market the opportunity, free of the government's hand, to set the proper price for government debt.
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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.
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New York Post BusinessTreasury Secretary Scott Bessent plans to “at least double” government buybacks. REUTERS
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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.
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New York Post BusinessBillionaire investor Stanley Druckenmiller admitted Tuesday that he used AI to pen a scathing Wall Street Journal op-ed bashing Treasury Secretary Scott Bessent’s debt buybacks.
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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 »
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FortuneIn the Journal, Druckenmiller criticized Treasury’s decision to double long-dated bond buybacks from $2 billion to at least $4 billion per operation—operations targeting securities with maturities of 10 to 30 years, announced after the 30-year Treasury yield had reached a 19-year high.
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“The market’s verdict was swift and correct,” Druckenmiller wrote. “This wasn’t liquidity management, it was price management.”
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New York Post BusinessLines in the article included: “This wasn’t liquidity management, it was price management;” “not a malfunction but the machine doing its job;” and “The bond market wasn’t being a vigilante, as some would argue. It was being a pushover.”
8 details only one outlet reported
Independent claims that didn't surface elsewhere in our corpus. Treat as supplementary — not corroborated across outlets.
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01 ZeroHedge By Michael Every of Rabobank US Treasury Secretary Bessent took out a tactical nuke in saying he could use $1trn from the Treasury General Account to fund Special Military Operation Twist bond buybacks vs. the $2bn per round increase we saw last week. That looks a lot like the ‘Whatever It Takes’ mentioned yesterday: his former mentor Stan Druckenmiller is not a fan, apparently.
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02 CNBC There's an old Wall Street adage: Stocks float on a sea of bonds. Options traders are betting the tide is going out.
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03 Financial Times Bessent’s bond intervention puts US Treasury on collision course with Fed Increased purchases of debt threaten to undermine central bank chief Kevin Warsh’s bid to tame inflation
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04 Fortune A Shakespearean saga is playing out between the White House, Treasury Department, the Federal Reserve and Wall Street—and Scott Bessent, to paraphrase Shakespeare, is being hoist on his own hedge-fund petard.
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05 New York Post Business Druckenmiller – the founder of Duquesne Capital who has been described as a mentor to Bessent early in his hedge fund trading career – defended his undisclosed use of AI to write the piece, arguing that it was a no-brainer.
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06 Washington Times Business NEW YORK — U.S. stocks are drifting Monday ahead of a week packed with potentially market-moving events. The areas of the bond market that the U.S. Treasury Department is trying to calm down, meanwhile, eased a bit.
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07 MarketWatch The billionaire investor, who worked with the treasury secretary at Soros Fund Management, voiced his disapproval of Bessent’s tactics in a strongly-worded oped published in the Wall Street Journal Monday. Titled, “Let the bond markets speak,” his fault-finding focused on Bessent’s unscheduled announcement last week that the Treasury would at least double its purchases on long-dated bonds BX:TMUBMUSD30Y.
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08 RealClearMarkets It seems like a lot has happened over the last few weeks. At the end of July, Treasury Secretary Bessent used the exchange stabilization fund to purchase Yen Read Full Article »
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