Bessent dared currency traders to bet against him as bond buyback size loomed
The Treasury is expected to announce Wednesday how large it will make its bond buyback operations, with analysts at Wrightson ICAP seeing $5 billion to $6 billion as a likely starting point
US long-term bond yields reached three-year highs on Wednesday following Treasury Secretary Scott Bessent's bond buyback announcement, which failed to meet market expectations. The move was deemed insufficient by many analysts, with Deutsche Bank strategist noting that the Treasury has "created this monster that it now has to keep feeding," implying a need for more substantial actions.
The smaller-than-anticipated buybacks suggest Bessent has accepted a limited role for such interventions, which are unlikely to reverse yields without addressing the underlying issues of debt and deficit, according to Evercore ISI analysts. Despite Bessent's efforts, market participants remain skeptical, with Société Générale researcher emphasizing that "Everything else is cosmetic."
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