Bessent’s move to tame rising bond yields has very little effect

Treasury Secretary Scott Bessent’s plan to ramp up bond buybacks offered only a temporary lift to the US bond market.

A day after the 30-year yield climbed to 5.32%, its highest since 2007, Bessent announced on Wednesday that the Treasury would at least double its buybacks to $4 billion per operation.

The move didn’t have the intended effect, and yields and mortgage rates both moved unpredictably.

Yield temporarily dropped to 5.18% before climbing back up by Thursday morning.

Meanwhile, the benchmark 10-year yield rose roughly 5 basis points to 4.704%.

Why is it a problem?
Higher bond yields can make borrowing more expensive across the economy, raising costs for mortgages, credit cards, auto loans, and other loans.

Energy prices have surged since the Iran war began in late February, pushing longer-term bond yields higher as investors expect inflation to persist.

Oil is up 50% this year, while gas prices have risen 37% since the conflict began, reaching a national average of $4.08 a gallon Wednesday.

Analysts view Bessent’s expanded buybacks as a tactical adjustment to limit soaring borrowing costs. However, experts caution it provides short-term relief rather than resolving underlying concerns: rising inflation and mounting government debt.

He is set to meet with Office of Management and Budget Director Russell Vought to discuss fiscal consolidation.