Bessent Leans Into His Role as America’s Bond Trader in Chief

Treasury Secretary Scott Bessent has shown he’ll do unconventional things to get markets moving his way. His latest maneuver is his most radical yet.

Facing an uncomfortable rise in longer-term interest rates, Bessent took action early Wednesday when the agency he leads announced that it would significantly step up purchases of government bonds as part of its existing buyback program. Markets quickly responded in a way they haven’t to Bessent’s previous moves, with stocks rising and Treasury yields falling sharply.

“I’ve been saying ‘bond traders can stop panicking when the Fed starts panicking.’ I guess I should have said, ‘bond traders can stop panicking when Scott Bessent starts panicking,” Jim Bianco, president of Bianco Research, posted on X shortly after the announcement.

A former hedge-fund manager who once specialized in analyzing geopolitical situations and economic data to make big-picture market bets, Bessent has cultivated the image of an unusually market-savvy Treasury secretary—not afraid to intervene in currency markets or cite market conditions when discussing how the government should conduct its borrowing.

Calling himself the “nation’s top bond salesman,” Bessent has talked openly about wanting to push down bond yields to lower mortgage rates and other borrowing costs. But that hasn’t gone according to plan, putting pressure on the Trump administration ahead of this year’s midterm elections.

Treasury yields, which set a floor on interest rates across the economy, have been steadily rising in recent months, with the yield on the 30-year bond topping 5.3% this week—its highest level in nearly two decades. Average mortgage rates have been creeping back up toward 7%, while the budget deficit has hovered near 6% of the country’s GDP—well above Bessent’s longer-term 3% target.

Though it was presented as a technical maneuver to improve the smooth functioning of the bond market, many on Wall Street saw the buyback plan as an obvious effort to achieve Bessent’s previously stated aims. And it appeared to work, with the 30-year yield dropping nearly a tenth of a percentage point in the initial hours after it was made—a sizable change for such a short period. Stocks ended higher, with the S&P 500, the Dow Jones Industrial Average and the Nasdaq composite all ticking up 0.2%.

The timing of the announcement clearly suggests “that they didn’t like what was happening,” said John Briggs, head of U.S. rates strategy at Natixis Corporate & Investment Banking.

Even if the Treasury doesn’t end up buying that many more bonds, the move sends a message that the government could always do more to keep yields in check, he added.

The Treasury Department didn’t respond to requests for comment. But some of Bessent’s allies said they also believed the move was intended to drive down bond yields.

“He’s financially savvy and he sees this as a way to alleviate the pressure on the rates,” said longtime external Trump economic adviser Steve Moore.

Bessent, who turns 64 years old this week, is hardly alone in the Trump administration in wanting lower interest rates. Elected by voters angry about the cost of living, President Trump has repeatedly argued that short-term rates set by the Federal Reserve should be much lower.

Trump’s administration launched a criminal investigation into former Fed chair Jerome Powell, which Powell said was linked to the president’s rate goals. The Justice Department later dropped the probe so Kevin Warsh could be confirmed as Powell’s successor.

Bessent’s talk early last year about bringing down Treasury yields struck many observers as at least partially intended to redirect Trump’s attention away from the Fed, the independence of which is widely seen on Wall Street as critical for financial stability.

In fact, it was never clear what Bessent could do to have a big impact on yields, which are largely determined by the economic outlook and how investors think the Fed will respond to those conditions.

In one move, Bessent spearheaded an effort to ease a crisis-era financial rule that some argued was keeping banks from holding more Treasurys. The Treasury Department has also held off on increasing the sizes of medium-to-long-term debt auctions—a step most analysts believe will eventually be necessary to fund the government’s hefty spending commitments.

Yields, though, have continued to climb, driven in large part by stubbornly high inflation and surprisingly strong economic growth. That combination has led investors to bet that the Fed’s next move will be to raise rates.

Bessent has become one of Trump’s most trusted advisers after previous tussles with other Trump allies. He became a lead voice on a host of policy decisions, including trade negotiations with China. Drawing on his Wall Street experience, he has also twice intervened in currency markets by buying Argentine pesos and Japanese yen—moves seen as unusual, if not unprecedented, in part because they weren’t part of a broader international effort.

Some investors were skeptical that Treasury’s buyback plan would have more than a short-term impact on the bond market.

The U.S. government has already been buying back older Treasurys for two years now. Officially, those buybacks are aimed at “liquidity support”—not driving down yields on new bonds but keeping yields on older bonds from drifting upward just because they are less actively traded.

Treasury on Wednesday said that it would increase the maximum amount of 10-year to 30-year Treasurys that it buys in a given operation from $2 billion currently to at least $4 billion, starting on Sept. 9 and running at least through Nov. 4.

Assuming a continuing $4 billion pace, Treasury would now buy back $128 billion of 10-year to 30-year Treasurys in a year. That is nearly 30% of expected issuance of those bonds, according to Natixis, but only 2.4% outstanding debt of those maturities.

“It’s just another piece of noise. I mean, they’re doing what they can, but how effective can they really be with all the other factors out there?” said Soren Erickson, a fixed-income trader at Badgley Phelps.

Other investors were more critical of Bessent, who argued in 2024 that the Biden administration had “distorted Treasury markets” by issuing too much in short-term Treasury bills.

Edison Byzyka, chief investment officer at Credent Wealth Management, said the increased buybacks appear political, meant to drive down rates ahead of the midterms.

“It puts into question the validity of the U.S. bond market,” he said, adding that it could push investors into alternative investments such as dividend stocks.