Washington | Investors renewed their selling of long-dated US government bonds amid worries about public debt and more attractive corporate alternatives, erasing most of the previous day’s gains linked to Treasury Secretary Scott Bessent’s stunning intervention.
The sell-off pushed yields on 30-year US Treasury debt up to 5.26 per cent early on Thursday (Thursday night AEST), slightly shy of a 19-year-high above 5.3 per cent hit earlier in the week.
Even a mid-morning television appearance by Bessent saying that he is prepared to expand efforts to buy back costlier debt was not enough to restart the rally, with yields easing only slightly to 5.24 per cent. Yields rise when bond prices fall.
“We have a big toolkit, so we’ll see,” Bessent said on CNBC. “And part of it is signalling here, and to show that we believe that the yields don’t reflect the underlying fundamentals.”
“We’re going to increase the size of the buyback,” he said. “I would note that it could be more than the $US4 billion ($5.6 billion) per issue.”
The events highlight the former hedge fund manager’s willingness to intervene in markets, while also revealing a divide on Wall Street between those who blame the ballooning US debt burden for yields rising to multi-decade-highs, and others who say the historic artificial intelligence infrastructure build-out is the cause.
Bessent surprised markets on Wednesday when he said Treasury would at least double its repurchase of bonds with maturities between 10 and 30 years to $US4 billion, in a small but symbolic move that lifts demand for those bonds and brings down long-term borrowing costs.
Source: https://www.afr.com/world/north-america/bonds-slide-as-bessent-s-intervention-fails-to-cheer-investors-20260821-p60q8g