Why Treasury Secretary Bessent’s moves to calm the bond market haven’t worked so far
Summary
Treasury Secretary Scott Bessent has tried to lower long-term borrowing costs by doubling the size of a bond buyback program. Despite this, interest rates on key government bonds rose because investors remain concerned about rising national debt, heavy borrowing by technology companies, and the Federal Reserve’s fight against inflation.Key Facts
- The 10-year Treasury note yield rose to 4.69%, nearly back to its level before the buyback announcement.
- Treasury plans to double bond buybacks to $4 billion per operation to reduce bond supply and raise prices.
- Higher bond yields increase borrowing costs for consumers and businesses, affecting mortgage rates.
- The national debt surpassed $40 trillion recently, a record high.
- The government budget deficit is expected to top $2 trillion this year.
- Treasury Secretary Bessent said a new plan to reduce the deficit may be announced soon.
- Heavy bond issuance by large tech companies is increasing supply, pushing yields higher.
- Some financial experts say reducing the deficit mainly depends on Congress, not Treasury actions.
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