US Treasury Secretary Scott Bessent has dismissed concerns about the American bond market, responding to questions following Thursday's debt buyback operation, which came in below expectations and pushed yields to multi-year highs. In an interview, Bessent stated the US Treasury market is in "very good shape," highlighting the strong performance of two recent bond auctions and praising how the American bond market has outperformed its global counterparts. He also reiterated that the recent correlation between bond prices and energy prices has been unusually high.
"Look, if some people on Bloomberg terminals aren't happy with what I'm doing, that's just too bad," Bessent said. His comments came as the 2-year Treasury yield touched its highest level since 2024, while the 10-year yield reached levels not seen since 2023. The bond selloff coincided with surging crude oil prices and the Treasury purchasing fewer bonds than analysts had predicted. The department bought just $5.19 billion in bonds on Thursday, falling short of the $6 billion ceiling announced on Wednesday. This operation marked the 53rd such transaction since the program was revived in 2024.
Bessent explained that "we will only buy bonds back at low prices," but as things stand, bondholders appear inclined to hold onto their longer-dated securities. He noted that the Treasury typically receives around $20 billion in repurchase offers, but this time only received roughly $10 billion.
Attributing part of the turbulence to Iran, Bessent pointed to his unconventional moves in recent weeks, including expanding the bond buyback program and unusually intervening in the yen exchange rate, both aimed at helping to push yields lower. "I'm not doing this deliberately before an election," he said on Thursday, noting that Iran is "trying to create economic problems for the US by manipulating bond yields or oil prices."
On the topic of market communication, Bessent sought to clarify his frequently repeated phrase, "I am the market." "When I said I am the market, I wasn't challenging people to come at me," he told traders two days ago, adding that regarding Japan and the yen, "if you want to bet against me, you can." On Thursday, he clarified he also did not mean "I'm always right, don't question me." Bessent said he actually intended to convey that he possesses more reliable information and is working to provide the market with a solid framework to prevent panic.
Federal Reserve Chair Kevin Warsh has publicly expressed a desire for the market to set its own prices without central bank guidance, and some observers have noted that Bessent's interventions in the Treasury market appear out of sync with Warsh's stance. "They want to make it into a Scott Bessent versus Kevin Warsh showdown," Bessent said of his critics. "That's all nonsense, nonsense." He added that investors are not demanding a premium to hold long-term US debt, dismissing the concerns as noise.
Since the US initiated its war against Iran, investors have been demanding higher yields on US Treasuries. Before the US launched strikes on Iran on February 28, the 10-year yield was below 4%, but by late Thursday it had climbed to 4.96%. The 30-year yield remains near its highest levels since 2007.