Traders Bet Bessent Can't Drive Yields Lower
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- Kalshi traders assign a 56% probability that the 10-year Treasury note yield ends 2026 at or above 4.75%, and just 27% odds it finishes above 5%, with the 10-year trading at about 4.7% at midday Monday.
- Polymarket speculators give 2-in-3 odds that the 10-year yield crosses 4.8% at some point in 2026, a level it has not breached even amid the recent bond sell-off.
- Treasury Secretary Scott Bessent has deployed multiple tools to cap rising yields, including doubling U.S. debt buybacks after last week's global bond sell-off driven by inflation concerns and the unresolved U.S.-Iran conflict.
- The Treasury Department announced doubled buybacks after U.S. national debt crossed $40 trillion, with yields initially falling on the news before rising again in subsequent days.
- CNBC reported that the Treasury may tap its $1 trillion General Account to fund expanded buybacks, prompting another temporary decline in yields that traders bet will not hold.
- Kalshi contract volume on the yield-related markets was thin at just over $16,500 traded, with both Kalshi and Polymarket contracts resolved using official U.S. Treasury data.
Why it matters: If prediction market traders are right, Bessent's toolkit — from doubled buybacks to potentially deploying the $1 trillion General Account — won't break the upward march in 10-year yields driven by $40 trillion in national debt and persistent inflation risk. That leaves the Treasury fighting a yield curve it can't fully control, with higher borrowing costs feeding back into the deficit.
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