Bessent's $6B Bond Buyback Backfires as Yields Spike — SkimNews
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- The Treasury Department announced a $6 billion repurchase of 10- to 20-year bonds at 11 a.m. ET Wednesday to reduce supply and push yields down, but yields instead spiked: the 10-year hit 4.85% (highest since November 2023) and the 20- and 30-year reached 5.3%.
- The Nasdaq Composite fell 0.6% and the S&P 500 dropped 0.5% on Wednesday as the bond selloff rippled into equities.
- Scott Bessent blamed rising yields on market "fever" and the "financial press" in a Breitbart interview, saying his job is to "push things back towards equilibrium" — a framing investors read as the Treasury defending a yield floor.
- Stanley Druckenmiller warned in a Wall Street Journal op-ed that once markets believe Treasury is defending a price, "every rise in yields becomes a test of official resolve"; investor Peter Boockvar echoed that the market will continue to "test" resolve if fundamentals warrant it.
- The U.S. national debt recently surpassed $40 trillion, intensifying concerns about America's reliance on foreign buyers as sovereign debt issuance surges globally.
- Yields began their sharp climb in late July after new Federal Reserve Chair Kevin Warsh held a press conference that bond traders read as insufficiently committed to using Fed tools against inflation, compounded by the Iran war's drag on prices and Trump's tariff policies.
Why it matters: Bessent's failed intervention exposes how little leverage the Treasury Secretary actually has over bond markets, and the market's aggressive test of his resolve means the U.S. government is now borrowing at its most expensive level since 2023 with a $40 trillion debt load and a Federal Reserve chair investors don't trust to fight inflation.
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