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Scott Bessent dared $32 trillion bond market with 'I am the house now' statement. It didn’t listen
fortune.com • • business
Key Points:
- The U.S. Treasury, led by Bessent, intervened alongside Japan in late July to support the yen, which has since strengthened to a seven-month high against the dollar, stabilizing the currency as intended.
- Despite Treasury buybacks aimed at adding liquidity and lowering yields, U.S. Treasury yields have surged, with the 10-year yield nearing 5%, a level not seen in two decades, raising concerns about higher government borrowing costs amid a $40 trillion national debt.
- Bessent remains confident in managing market stability, citing past successes and suggesting economic growth could offset debt concerns, but experts warn that controlling rising yields may require spending cuts, which the administration has been reluctant to implement.
- Rising yields coincide with Brent crude oil prices surpassing $100, intensifying inflation fears and increasing the cost of government borrowing, while traders look to Bessent for insight on U.S. monetary policy amidst reduced Federal Reserve forward guidance.
- Market experts view Bessent’s influence as significant but unproven in the bond market’s current volatility, with the effectiveness of his rhetoric and interventions to stabilize yields still uncertain.
