The 10-year Treasury yield hit 5.041% on Tuesday, the highest in 19 years and the highest since 2007. That same day, Treasury Secretary Scott Bessent told Congress the government’s bond buyback was working.
The mechanics don’t line up with that claim. When bond yields started rising in August, the Treasury said it would triple its buyback of government debt, from $2 billion to $6 billion, to bring yields down. They kept rising. Bessent called the buyback operations “the two most successful treasury auctions that we’ve had in 20 years.”
Why yields keep climbing
Yields rise when demand for bonds falls. Investors are wary of what the war in Iran is doing to energy prices: Brent crude reached $108 a barrel last week, the first time since May. The Federal Reserve is also weighing another rate hike to fight inflation.
The 10-year yield matters because it underpins other borrowing, including mortgages, car payments and credit card debt. Higher yields mean higher costs for all of them.
Inflation has been the political backdrop. It reached a three-year high of 4.2% in May before easing to 3.4% in July and August. The war and prices are expected to weigh heavily on the coming midterm election. The Fed announces its rate decision on Wednesday, and it is largely expected to raise rates for the first time since July 2023, though Donald Trump has demanded they be cut.
Bessent’s other claims
Bessent also said that since President Trump took office, the US bond market “has been the best-performing bond market in the developing world.” That is a striking statement on the day yields reached a 19-year high.
He addressed Japan too. Earlier in August the US government moved to support the Japanese yen, a step seen as protecting the Japanese government, a major holder of US bonds. Bessent told Congress it signaled American support for Japanese policies.
Sources
- US treasury secretary hails government’s bond buyback a success
- US Treasury Buyback Success: 10-Year Yield Hits 19-Year High
