Treasury Secretary Bessent says bond buyback was effective and warns of tools to stabilize market

Treasury Secretary Scott Bessent told lawmakers on Tuesday that the Treasury’s $6 billion buyback of long-dated government bonds last week was effective, noting that the 10-year Treasury yield would likely have risen higher without the intervention. He suggested looking at the "counterfactual" to gauge the program’s impact and highlighted that the Treasury subsequently conducted two of the most successful bond auctions in two decades.

The buyback, announced on Aug. 19 and executed on Sept. 10, was three times larger than a typical operation. While the Treasury says the move was intended to keep debt markets liquid, observers have interpreted it as an effort to curb rising yields. The 10-year Treasury yield breached 5 percent on Tuesday, a level not seen since 2007, amid higher oil prices, inflation concerns and a national debt that recently exceeded $40 trillion.

When asked if addressing the United States’ debt burden is necessary to lower yields, Bessent agreed that debt is one factor among several driving the 10-year rate higher. He also reiterated that a fiscal consolidation plan will be announced soon, though no specifics were provided.

Looking ahead, Bessent said the Treasury is finalising rules for the GENIUS Act, which will govern stablecoins starting in 2025, and he expects demand for safe-haven assets such as Treasury bills to rise, potentially pushing yields lower and supporting the dollar.