US Treasury Secretary Scott Bessent has indicated readiness to enlarge the scope of buybacks targeting higher-cost government debt, while the Trump administration prepares to unveil new fiscal initiatives in response to borrowing costs reaching multi-year peaks.
In a Thursday interview, Bessent stated: "We may announce a further focus on fiscal consolidation this weekend or early next week." He separately informed reporters that President Donald Trump has tasked him and Office of Management and Budget Director Russ Vought with advancing this effort.
The Treasury announced Wednesday it would "at least double" the size of its buyback program for longer-dated securities. However, the market response proved fleeting, with the 30-year Treasury yield surrendering its post-announcement gains by Thursday. Following Bessent's remarks, both 10-year and 30-year yields remained elevated.
Bessent downplayed Thursday's market movements, describing "anything that happens within 24 hours" as "noise." He further emphasized that the expanded buyback operations could "exceed" the current planned $4 billion per operation, scheduled to commence next month.
When questioned about how aggressively the Treasury might act to suppress bond yields, Bessent responded: "We have a large toolbox, so we will see. Part of that role is signaling that we believe current yields do not reflect fundamentals."
Wednesday's surprise buyback expansion announcement came after the 30-year Treasury yield climbed to its highest level in nearly two decades, with the 10-year yield also reaching heights unseen since before Trump assumed office.
Bessent remarked: "Everything we do is simply aimed at getting people to focus on fundamentals rather than trading on headlines during thin, illiquid markets." He did not specify which "headlines" concerned him, though Treasury data released Wednesday showed a broad US debt measure surpassing $40 trillion for the first time.
Bessent declined to detail the contents of the new fiscal initiatives. He did mention that an anti-fraud task force could save the government "hundreds of billions of dollars," noting that "many programs allocated to states" are being "wasted" and may face cuts.
He also expressed that the US fiscal deficit has "very likely" peaked, citing the rebuilding of the import tariff system following the Supreme Court's overturning of most of Trump's tariff measures last year, which has revived tariff revenue.
Regarding the new fiscal plan, Bessent stated: "As we finalize this package, the coming weeks and months will be very exciting."
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