US long-term bond yields spiked to three-year highs Wednesday after Treasury Secretary Scott Bessent’s bond buybacks failed to impress markets.
Borrowing costs leapt higher in part because investors expected more firepower, a Deutsche Bank strategist told Bloomberg: “It’s like Treasury created this monster that it now has to keep feeding.”
Bessent’s smaller-than-expected move suggests he’s accepted a “limited role” for buybacks, Evercore ISI analysts wrote, which aren’t likely to reverse yields without addressing the “direction of the debt and deficit,” a Société Générale researcher said. “Everything else is cosmetic.”
Bessent is juggling multiple interventions, daring traders to take the opposite side of his yen purchases. “I have asymmetric information. I am the house now,” he said Tuesday.