Following a series of surprising moves this year, Scott Bessent has established himself as the most hands-on US Treasury Secretary in decades when it comes to financial market intervention. He is staking his reputation on efforts to curb what he views as a potentially damaging rise in American borrowing costs.
Another unexpected development emerged on Wednesday. The Treasury Department announced it would at least double the size of its liquidity-support buyback operations for 10-year to 30-year bonds, just two weeks after unveiling the schedule for the buyback program. Earlier this month, the department had already opened the door to potentially reducing issuance of longer-dated securities.
On July 31, Bessent spearheaded the first US purchase of yen in 30 years, a move seen as reducing the need for Japan to sell Treasuries to buy its currency. Earlier this year, Bessent also initiated so-called currency rate checks—where officials call banks to inquire about yen quotes—a step that surprised even a former Japanese official.
"He's absolutely a man of action," said Mark Sobel, a former US Treasury official now with research group OMFIF. "It reminds me of his hedge fund background." As for the motivation, he said: "It's clear to me that he and the administration are deeply concerned about rising long-term yields." The Treasury has not responded to requests for comment on Bessent's market measures.
As the steward of US economic policy and financial markets from the White House, Treasury Secretaries have often had to intervene during crisis moments. But this is not such a moment, as the bond selloff has been orderly and has persisted for months. Yet, when the 10-year Treasury yield—the financial benchmark Bessent watches—rose above levels seen before Trump returned to the White House, he acted swiftly, signaling deepening concern in Washington.
Market anxiety over inflation, Federal Reserve policy, and the massive fiscal deficit has pushed yields higher, keeping mortgage rates elevated and creating headwinds for economic growth with the November election just months away. The Treasury has long adhered to a principle of "regular and predictable" bond issuance to avoid catching investors off guard.
Bessent himself endorsed this philosophy during a keynote speech at a US Treasury market conference last November. However, he also noted in that address: "My job is to be the nation's top bond salesman. Treasury yields are an important barometer of my competence." He also emphasized the importance of lowering Treasury rates for the economy.
Gregory Faranello, head of US rates trading and strategy at AmeriVet Securities, said of Wednesday's announcement: "This does go against 'regular and predictable'—but that's the world we live in now." The message, Faranello said, is clear: stop yields from rising.
Bessent's predecessor Janet Yellen also took action in 2023 to curb yield increases. That measure was announced through the routine quarterly debt issuance statement, and Bessent was among the Republicans who criticized it as politically motivated, aimed at stimulating the economy before the election.
Stephen Miran, former chief economic advisor to President Trump and former Fed governor, co-authored a paper in July 2024 criticizing "active Treasury issuance" (ATI). "Election season" Miran and co-author Nouriel Roubini wrote that once a party begins using ATI to stimulate the economy heading into election season, all future governments may repeatedly follow suit.
Weeks before the Treasury's action, Federal Reserve Chairman Kevin Warsh had expressed enthusiasm about financial markets moving away from forward guidance. He said market participants are learning to watch the ball rather than the referee, and that market prices will continue to adjust in the direction and magnitude market participants deem appropriate.
Bessent has expressed similar views in the past, writing in an article last year that Fed bond purchases had created "distortions" in markets and "disrupted a vital source of feedback." However, said Brad Setser, senior fellow at the Council on Foreign Relations, this administration has proven it is not one that sets stable rules and then lets markets decide outcomes on their own.
Now 63, Bessent is known for his high-stakes successful bets on the pound and yen during his time working for George Soros. Some market participants see echoes of his former career in Wednesday's actions. Brad Golding, portfolio manager at Christofferson Robb & Co., said it resembles the old tactic of "sweeping all the sell orders off the board." This refers to a hedge fund strategy of placing simultaneous orders with multiple large dealers to trigger significant market moves.
As the cabinet official managing the world's largest economy, the Treasury Secretary has historically intervened significantly during crises. The Treasury played a key role during the pandemic, led major bailout programs during the global financial crisis, and took the lead in multiple emerging market rescue operations in the 1990s. But some observers note that what makes Bessent's actions different is that they have not been triggered by crises or particularly disorderly market conditions.
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