--- title: "Saving US Treasuries with a \"Soros Style\": From Exchange Rates to Interest Rates, Can Bessent Beat the Market?" type: "News" locale: "en" url: "https://longbridge.com/en/news/296413513.md" description: "\"Soros disciple\" Bessent, known for \"finding cracks\" while assisting Soros in shorting the pound and the yen, is now applying the same market intuition to shift from offense to defense in an attempt to suppress US Treasury yields. Since the beginning of this year, he has taken successive actions, including coordinating with Japan to intervene in the yen, hinting at cuts to long-term debt issuance, and announcing a doubling of the scale of long-term bond buybacks—earning him the title of \"the most aggressive Treasury Secretary in decades in terms of market intervention.\" However, critics argue that intervention fails to address the root cause of fiscal deficits" datetime: "2026-08-20T00:16:07.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296413513.md) - [en](https://longbridge.com/en/news/296413513.md) - [zh-HK](https://longbridge.com/zh-HK/news/296413513.md) --- # Saving US Treasuries with a "Soros Style": From Exchange Rates to Interest Rates, Can Bessent Beat the Market? The man who once helped Soros bring down the Bank of England is now using the same tactics to defend the US Treasury market? Since the beginning of this year, US Treasury Secretary Scott Bessent has made a series of unexpected market moves, staking his reputation on suppressing US borrowing costs. According to Bloomberg, **he has become "the most aggressive Treasury Secretary in intervening in financial markets in decades."** Following the US-Japan joint intervention in the yen, Bessent's latest move is to expand US Treasury buybacks. The Treasury Department announced that it would "at least double" the scale of buybacks for 10- to 30-year US Treasuries—a plan that had only been published two weeks prior. On the day the news broke, the 10-Year Treasury Yield fell by about 6 basis points, the 30-year yield dropped by nearly 9 basis points, and the US Dollar Index also fell to a three-month low. The market's reaction confirmed Bessent's judgment: he has publicly stated, "My job is to be the nation's top bond salesman, and the 10-Year Treasury Yield is the barometer of success." ## From Pound Short-Seller to Bond Market Gatekeeper To understand Bessent's strategy, we must go back to 1992. That year, Bessent, then in his twenties, worked at the Soros Fund Management and participated in building the short position against the British pound. On "Black Wednesday," the pound was forced to exit the European Exchange Rate Mechanism, and Soros netted over $1 billion. According to media reports, a former advisor described Bessent at the time as someone who "could see market vulnerabilities that others missed." Later, he returned to Soros as Chief Investment Officer. In 2013, he led a $1 billion short position against the yen, again reaping substantial returns. In 2015, he founded Key Square Capital Management with $4.5 billion, successfully betting on both Brexit and Trump's two election victories. This hunter's logic of "finding cracks and pushing with the trend" ran through his entire hedge fund career. Now, he is using the same intuition to do the exact opposite—defending a market under pressure. ## This Year's Intervention Map: From Yen to US Treasuries Bessent's actions this year have formed a clear logical chain. **Step one, yen intervention.** On July 31, the US Treasury Department joined Japanese authorities in buying yen, marking the first direct US intervention in the yen exchange rate in nearly thirty years. According to data from the Peterson Institute for International Economics (PIIE), Japan used approximately $87 billion in foreign exchange reserves to buy yen in the last two days of July. The US Treasury Department "joined in the final stage, providing a relatively limited amount of funds, but sending an important signal of political support." Notably, the Treasury sold euros rather than dollars, and did not notify Eurozone authorities in advance. There is a hidden thread behind this: Japan holds about $1.1 trillion in US Treasuries, making it the largest overseas holder. If Japan had to finance the intervention alone, it might have been forced to sell US Treasuries, further pushing up long-end yields. Washington's participation allowed Japan to sell fewer US Treasuries, thereby indirectly protecting the yield curve that Bessent cares about most. **Step two, signals of contraction on the issuance side.** Earlier this month, the Treasury Department hinted at potentially cutting the scale of long-term bond issuance, conveying expectations of tighter supply to the market. **Step three, increased buybacks.** This week, it announced that the scale of long-term bond buybacks would at least double, directly supporting prices from the demand side. Bloomberg cited Brad Golding, a portfolio manager at Christofferson Robb & Co., who said this resembles an "old-school 'clearing the screen' technique"—a hedge fund strategy that places orders with multiple large dealers simultaneously to trigger significant market volatility. Mark Sobel, a former US Treasury official now at the OMFIF research institute, told Bloomberg: "He is definitely an activist, which recalls his hedge fund background." "He and this administration are clearly concerned about the rise in long-end yields." ## Breaking "Rules and Predictability" Bessent's operations directly conflict with the Treasury Department's traditional principles. The US Treasury has long adhered to principles of "regularity and predictability" in debt management, avoiding surprises for the market. Last November, Bessent himself publicly endorsed this principle at a Treasury market conference. But now, his actions have deviated from that commitment. Gregory Faranello, head of US rates trading and strategy at AmeriVet Securities, told Bloomberg: "This violates the principle of 'regularity and predictability'—but this is the world we live in." "The signal is clear: stop yields from rising." More ironically, Bessent's predecessor, Janet Yellen, also suppressed yields in 2023 by adjusting the structure of debt issuance, and Bessent was among the critics at the time, accusing the move of being politically motivated. Stephen Miran, former chief economist for Trump, also co-signed a paper in 2024 criticizing "Aggressive Treasury Issuance" (ATI). According to Bloomberg, Miran and Nouriel Roubini wrote in the paper: "Once a party begins using ATI to stimulate the economy during an election season, all future administrations may follow suit." ## Skepticism: Can Intervention Solve Structural Problems? While the market has reacted to Bessent's moves in the short term, economists' skepticism is more fundamental. In the first ten months of fiscal year 2026, federal net interest expenditures reached $963 billion, equivalent to about $3.18 billion per day, a 14% year-on-year increase. The 10-Year Treasury Yield stands at 4.72%, and the 30-year yield at 5.31%—a large volume of old debt issued below 2% is being rolled over at higher interest rates. The deficit so far in fiscal year 2026 is $1.8 trillion, an increase of 5% from the previous year. Spending on Social Security, Medicare, national defense, and debt interest is all rising, while Republicans are discussing further tax cuts. Robin Brooks, a senior fellow at the Brookings Institution, bluntly told Bloomberg: "**This is not solving the fundamental problem—reducing debt and compressing fiscal deficits—but rather attempting to manipulate the yield curve.**" John Velis, macro strategist at BNY, also stated: "Given current spending policies and wars, it will be very difficult to alleviate pressure on the long end." The effectiveness of yen intervention is also questionable. After the USD/JPY hit a high of 163.98 on July 23, it fell to 159.43 by August 17. However, according to CNBC, the intervention did not stop the continued weakening of the yen. Maurice Obstfeld of PIIE stated directly that intervention had little effect, noting that "foreign exchange intervention is not a free lunch, not even a free cake." Guy Miller, chief strategist at Zurich Insurance, told Bloomberg: "This approach can only work for a while. When the Treasury Department explicitly states its intention to intervene continuously, it can indeed produce quite strong effects. But ultimately, if reckless fiscal policies are not addressed, this is unsustainable." Peter Boockvar, Chief Investment Officer at Onepoint Bfg, was more direct: "**He is fighting a war on two giant markets simultaneously—US Treasuries and foreign exchange—which is an extremely difficult battle.**" ## A Gamble on Credibility Bessent's logic is clear in his own statements. Last month, discussing the Trump administration's holdings in technology and resource companies, he said: "What we are doing is creating market signals." He stated on Fox Business: "Essentially, it is telling investors, okay, here is where the puck is going, skate to where it is going quickly." The problem is that shorting the pound in 1992 was about finding an institutional weakness and striking with the trend. Now, he faces structural pressures driven by fiscal deficits, inflation expectations, and Federal Reserve policy—issues that cannot be fundamentally changed by buyback operations or exchange rate interventions. According to Bloomberg, Mark Sobel, who served at the Treasury Department for nearly 40 years, believes that Bessent is at least the most aggressive Treasury Secretary since the beginning of this century. 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