Treasury Secretary Scott Bessent claimed his government position gives him an edge against traders, drawing immediate fire from market experts who accused him of running an “Activist Treasury.”
‘Activist Treasury’
The clash comes as the Treasury has announced the scale of an expanded bond buyback program aimed at constraining long-term U.S. bond yields. The initiative has drawn sharp criticism from Wall Street figures. Financial commentator Bob Elliott of Unlimited Funds directly challenged the policy on X, stating: “Call it what it is – Activist Treasury Buybacks.”
Bessent’s former mentor, billionaire investor Stanley Druckenmiller, echoed this sentiment, recently publishing a Wall Street Journal op-ed slamming the Secretary for attempting to manually lower yields.
‘I Am The House’
The criticism follows Bessent’s Tuesday appearance at the SMU Cox School of Business in Dallas, where he boldly warned traders not to challenge his separate efforts to strengthen the Japanese yen.
“Whenever people say, ‘Oh, well, Treasury Secretary is taking a risk’ — well, it’s my dream; I have asymmetric information,” Bessent stated during an interview moderated by Ray Washburn.
“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said. “And you can bet against me if you want.”
Market Fragility
The buyback announcement is expected to potentially double initial estimates to $8 billion or more. The measure is closely watched by investors, as the previous announcement sparked a 20% surge in Bitcoin and impacted gold.
However, analysts warn the strategy could force the Treasury into a cycle of endless market support. Craig Shapiro noted that while a large buyback flattens the yield curve, the broader economic regime remains fragile.
“My prediction is that whatever he decides this time, he will be forced to do more at the next buyback,” Shapiro stated. “Markets always want more.”
How Have Stocks and Bonds Performed?
At the last check, the 30-year Treasury bond yielded 5.25%, the 10-year Treasury bond was at 4.81, and the two-year bond was at 4.41%.
The primary ETF specifically tracking the long end of the U.S. Treasury yield curve—including the 30-year benchmark bond—is the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), which closed 0.01% lower at $82.20 on Tuesday. It was down 6.44% year-to-date, down 0.68% over the last month and 8.40% over the last year.
The S&P 500 index has advanced 11.88% year-to-date. Similarly, the Nasdaq Composite index was up 13.71%, and the Dow Jones gained 9.10% YTD.
On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. The SPY was down 0.55% to $765.96, while the QQQ advanced by 0.083% to $718.36. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), also ended 1.13% lower at $528.03.
In premarket trading on Tuesday, SPY was down 0.32%, QQQ fell 0.48%, and DIA fell 0.55%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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