Here’s how Bessent’s newly activist Treasury Department is undercutting the Fed’s Warsh

The US Treasury Department, led by Secretary Scott Bessent, has intervened in Treasury markets to lower the cost of government debt. This move has been met with skepticism by bond market watchers, who doubt its effectiveness in offsetting factors such as inflation fears and Federal Reserve communication changes that have contributed to higher yields. According to BNP strategists, the Treasury's plan to boost long-dated bond buying will struggle to offset declining Fed credibility or rising rate expectations.

The intervention has also been criticized by economist Robin Brooks, who warns that it signals "debasement" of the dollar and may put depreciation pressure on the currency. Brooks, a senior fellow at the Brookings Institution, believes that the buyback scheme is mere financial engineering that doesn't address the underlying problem of the deficit, which is on track to reach $2 trillion this fiscal year.

MarketWatch reports that experts say this move undercuts the credibility of Federal Reserve Chairman Kevin Warsh to make interest-rate policy.

The Treasury's plan, which begins on September 9 and remains effective through November 4, aims to lower yields by buying back long-term bonds. However, yields have continued to rise, with the 30-year Treasury yield up around 2 basis points to 5.27% and the 10-year yield nearly 3 basis points higher, over 4.73%, as reported by Yahoo Finance.

Brief written by urgent.news from MarketWatch, Yahoo Finance, Fortune — 3 reports on this story. Machine-written — may contain errors; check the original before relying on it.