Scott Bessent has a plan to bring down long-term US borrowing costs. The bond market has a different plan.
The Treasury Secretary announced on August 19-20 that the government would double the size of its buyback operations for longer-dated bonds, jumping from $2 billion to at least $4 billion per operation starting September 9. The idea is straightforward: scoop up 10- to 30-year Treasuries to reduce supply, prop up prices, and push yields lower. Yields on those bonds serve as the baseline for everything from mortgage rates to corporate borrowing costs, so getting them under control matters for the entire economy.
The market’s response was polite but firm: no thanks. After a brief dip following the announcement, yields snapped right back. The 10-year Treasury yield closed the week between 4.69% and 4.73%, while the 30-year yield settled between 5.23% and 5.27%. That 30-year figure is the highest since 2007.
Why the bond market isn’t buying it
Three forces are working against Bessent, and none of them respond well to buyback programs.
