Why Treasury Secretary Bessent’s moves to calm the bond market haven’t worked so far

Treasury Secretary Scott Bessent's efforts to lower long-term borrowing costs have been unsuccessful, as interest rates rebounded. This is attributed to investor concerns about rising government debt, significant borrowing by tech firms, and uncertainty surrounding the Federal Reserve's inflation-fighting commitment. Bessent announced an increase in the Treasury's bond buyback program to $4 billion per operation, aiming to reduce bond supply and boost prices, but analysts suggest this is insufficient given the market's size. Investors are also skeptical of the Fed's resolve to combat inflation, exacerbated by rising oil prices and confusion over Fed Chair Kevin Warsh's policy signals. The administration plans to announce measures to reduce the government's budget deficit, though experts note deficit reduction is largely Congress's responsibility.

The US Treasury is doubling its buyback of government debt to stabilize the bond market amidst concerns over high inflation. This action comes as yields on 10-year, 20-year, and 30-year treasury notes reached 20-year highs this week, with the 30-year yield hitting its highest rate since 2007. The Treasury stated this policy aims to "provide greater liquidity support" to the long-term bond market. Yields subsequently dropped following the announcement. The article also mentions investor unease related to the Iran conflict and persistent inflation, particularly in oil prices, impacting borrowers as loans like mortgages are backed by treasuries.