Treasury Turns to Interventionist Tactics to Lower Interest Rates
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- U.S. gross national debt topped $40 trillion on Wednesday, a milestone driven largely by growing interest payments to holders of government debt.
- Treasury Secretary Scott Bessent announced the Treasury would double the amount of government debt it is permitted to buy back from investors, aiming to limit the rise of long-term bond yields and contain borrowing costs.
- Bessent told CNBC that yields 'don't reflect the underlying fundamentals' and said investors are misreading the market, arguing the Treasury is 'trying to keep the market in equilibrium.'
- Long-term Treasury yields had spiked to their highest levels since 2007 before dipping after Bessent's announcement, but by Thursday yields were rising again.
- Voters have soured on President Trump's handling of the economy as high interest rates and elevated prices have combined to worsen sentiment.
Why it matters: With $40 trillion in national debt and yields at 2007 highs, Bessent's doubled buyback program bought only a one-day reprieve before yields resumed climbing Thursday — underscoring that Treasury's signaling tools can't override the fiscal math of compounding interest payments that now drive the debt trajectory.
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