"Only When Bessent Panics Will the Treasury Market Stop Panicking"! Is Bessent Becoming the "Commander-in-Chief of US Treasuries"?

US Treasury Secretary Bessent is engaging in a direct confrontation with the continuous rise in US Treasury yields, adopting the most aggressive market intervention stance seen in decades.

On Wednesday, the Treasury Department announced a significant expansion of its Treasury buyback program, planning to at least double the single-operation cap for 10- to 30-year Treasury bonds from $2 billion to $4 billion. Following the announcement, the 30-year Treasury yield fell by nearly 10 basis points within hours, while the three major US stock indices closed slightly higher, up 0.2%.

Jim Bianco, President of market research firm Bianco Research, subsequently posted on X: "I always said 'only when the Fed starts to panic do bond traders stop panicking.' I think I should change that to 'only when Bessent starts to panic do bond traders stop panicking'." The Wall Street Journal, in its latest headline, stated that Bessent is further reinforcing his role as the "Commander-in-Chief of US Treasury Trading."

This intervention marks the most forceful of a series of unconventional operations by Bessent this year, making him the most actively interventionist US Treasury Secretary in decades. The US Treasury market has long adhered to the principle of "regular and predictable" issuance, with Treasury Secretaries often forced to intervene only during crises. However, Bessent's move was not driven by a crisis or particularly chaotic market conditions. Some analysts believe that even if the Treasury ultimately does not purchase that many bonds, this action sends a message that the government can take more measures to control yields.

However, several market participants and economists remain skeptical about the lasting impact of this move, arguing that operational interventions are difficult to fundamentally suppress yields against the backdrop of high fiscal deficits and stubborn inflation.

High Yields Force Bessent's Hand

The continuous rise in US Treasury yields was the direct trigger for this intervention.

The 30-year US Treasury yield broke through 5.3% this week, hitting a new high in nearly two decades; the 10-year yield also rose above levels seen before Trump's return to the White House. Meanwhile, 30-year fixed mortgage rates are approaching 7% again, and the fiscal deficit as a percentage of GDP hovers around 6%, far above Bessent's long-term target of 3%. For the period elapsed in the current fiscal year, the FY2026 deficit has already reached $1.8 trillion, an increase of 5% compared to the same period last year.

Bessent has publicly positioned himself as the "Nation's Chief Bond Salesman," explicitly stating his desire to lower Treasury yields to reduce mortgage rates and other borrowing costs. However, the continuous rise in yields has thwarted this goal, creating political pressure for the Trump administration ahead of the midterm elections.

John Briggs, Head of US Rates Strategy at Natixis Corporate and Investment Banking, stated that the timing of the announcement "clearly indicates they are unhappy with current market trends," pointing out that even if the Treasury ultimately does not purchase that many bonds, this action sends a message that the government can take more measures to control yields.

Buyback Expansion: What Scale, What Effect?

From a technical perspective, the adjustments announced by the Treasury Department will take effect on September 9 and last at least until November 4.

At a pace of $4 billion per operation, the Treasury will repurchase approximately $128 billion worth of 10- to 30-year Treasury bonds annually. According to Natixis estimates, this scale accounts for about 30% of the expected issuance volume for bonds of these maturities, but represents only 2.4% of the outstanding debt for these maturities.

Although the Treasury Department characterized this operation as a technical measure to improve bond market liquidity, Wall Street generally interprets it as a policy intent to suppress yields. Steve Moore, a long-time economic advisor to Trump, stated that Bessent "has a financial mind and sees this as a way to alleviate interest rate pressure."

However, market evaluations of the intervention's effectiveness are sharply divided. Fixed income trader Soren Erickson bluntly stated, "This is just more noise. They are doing their best, but how much effect can they have against so many external factors?" Edison Byzyka, Chief Investment Officer at Credent Wealth Management, criticized the move as politically motivated, aiming to artificially suppress interest rates before the midterm elections, "which raises questions about the credibility of the US bond market," and warned it could push investors toward alternative assets such as dividend stocks.

Frequent Interventions: Bessent Breaks the "Regular and Predictable" Principle

This expansion of buybacks is the latest link in a series of market intervention actions by Bessent this year.

Just two weeks ago, the Treasury Department released the schedule for its buyback program; earlier this month, the Treasury opened a policy window to reduce the issuance scale of long-term bonds. Even earlier, on July 31, Bessent led the first US authority purchase of Japanese yen in thirty years, interpreted by the market as a move to alleviate pressure from Japan's selling of US Treasuries; earlier this year, he also deployed so-called "exchange rate inquiries"—asking banks for yen quotes—a move that even surprised former Japanese officials.

The US Treasury market has long adhered to the principle of "regular and predictable" issuance, a principle Bessent himself explicitly endorsed in a keynote speech last November. Gregory Faranello, Head of US Rates Trading and Strategy at AmeriVet Securities, stated that this announcement "violates the 'regular and predictable' principle, but this is the reality we are in. The signal is clear: stop the rise in yields."

Mark Sobel, a former US Treasury official now at the research institution OMFIF, stated that Bessent is at least the most proactive Treasury Secretary since the early 2000s, with a style that "reflects his hedge fund background."

Notably, Bessent's predecessor, Yellen, curbed rising yields in 2023 through regular quarterly debt issuance statements, a move criticized by several Republicans, including Bessent, as politically motivated. Stephen Miran, former chief economic advisor to Trump, also co-authored an article with Nouriel Roubini, warning that "aggressive Treasury issuance operations" once set a precedent, future administrations might replicate them during election seasons.

Treating Symptoms, Not the Cure: Market Confidence in Doubt

Several economists and market participants pointed out that Bessent's intervention toolkit faces structural constraints.

Robin Brooks, a Senior Fellow at the Brookings Institution, criticized that "rather than solving the fundamental problem—reducing debt and narrowing the fiscal deficit—these operations are merely attempting to manipulate the yield curve."

Douglas Rediker, Managing Partner at International Capital Strategies, pointed out that Bessent's approach differs from conventions of recent decades, "making it clear to everyone that his method involves more proactive intervention, even without the usual crisis triggers."

Guy Miller, Chief Strategist at Zurich Insurance, stated that when the Treasury clearly signals continued action, the intervention effect can be quite significant, "but ultimately, if wasteful fiscal policies are not addressed, this effect cannot continue indefinitely."

Peter Boockvar, Chief Investment Officer at Onepoint Bfg, was more direct in his assessment: "He is simultaneously wrestling with two massive markets—US Treasuries and foreign exchange—an extremely difficult battle."