Key facts
- Treasury Secretary Scott Bessent defended the department's intervention in the bond market.
- Critics argue Bessent's efforts to lower bond yields have backfired.
- The benchmark 10-year Treasury yield briefly climbed above 5.04% on Tuesday, its highest level since 2007.
- Treasury buybacks were tripled as part of the intervention.
- Paul Donovan, chief economist at UBS, argued Bessent's intervention did not contribute to the recent yield spike.
- Bessent also stated he supported giving Americans $5,000 dividends if Republicans win in November.
Treasury Secretary Scott Bessent defended the department's intervention in the bond market, which aimed to lower yields but has faced criticism for being ineffective and potentially exacerbating the problem. Bessent, who joined the administration last year with significant market experience, has vowed to ease the cost of money by driving down bond yields.
However, critics like Tim Mahedy, CEO of Access/Macro, argue that Bessent's actions have had the "exact opposite impact that he wanted," with the benchmark 10-year Treasury yield briefly climbing above 5.04% on Tuesday, its highest level since 2007. This intervention, which tripled Treasury buybacks, has made borrowing more expensive for consumers and businesses.
Some analysts, such as Paul Donovan, chief economist at UBS, believe Bessent's bond buyback plan had no discernible impact and that rising crude oil prices are the primary concern for bond markets. Legendary investor Stanley Druckenmiller, Bessent's mentor, also penned an op-ed warning that efforts to suppress yields would backfire. Douglas Holtz-Eakin, president of the American Action Forum, stated that Bessent's move to control yields was "doomed to fail" because it did not address fundamental issues like trillion-dollar deficits.
Despite promises to reduce the federal deficit, it is currently running at about twice the targeted level of 3% of GDP. Bessent also testified before Congress, stating he supported giving Americans $5,000 dividends if Republicans win in November.