Treasury Secretary Scott Bessent may have wanted the so-called "Economic D-Day" press conference focused on U.S. plans to isolate Iran with more sanctions. But questions on the bond market kept coming up, and no one got a straight answer.
Last week, after 30-year yields surged to levels not seen since 2007, Bessent unexpectedly announced he would increase the amount of long-term debt the Treasury buys back from the market in each operation from Sept. 9 and through Nov. 4. The amount was increased to at least $4 billion, up from $2 billion earlier.
When asked whether there is a possibility of more bond buybacks anytime soon, Bessent said "we haven't bought a single bond yet. The next time we have an operation is September 9th, so we will see on September 9th."
The new response is a subtle walk-back from his prior statement. Bessent told CNBC on Thursday that buyback operations could be even larger than the new higher minimum.
The conflicting statements are eating away at the Treasury's institutional credibility. Buybacks aren't a way to mitigate episodes of acute bond market stress and are expected to be always regular and predictable, per the Treasury's stated view in May 2023.
Adhering to predictable framework has afforded the Treasury some goodwill over the years, including lowering the cost at which it funds U.S. debt and thereby keeping a lid on costs to taxpayers.
Bessent also said during the same CNBC interview that he has "a big tool kit" at his disposal to help the bond market. That kit has been the talk of the town with some strategists speculating he would reduce the amount of long-term debt.
Bessent, at the presser this afternoon, sidestepped a question on whether the future auction sizes of longer-term dated Treasury debt would be reduced.
"We are going to continue with our regular program of auctions, so you will be hearing from us again at the beginning of next quarter," Bessent said.
Overall, it appeared Bessent wanted the market to take it one day at a time. That is a hard ask after the buyback surprise.