“Don’t Fight Bescent’s Treasury” is a new mantra for the US bond market
Treasury Secretary Scott Bescent can’t stop talking about 10-year bond yields. inspeechinInterviewa week laterweekhe states and paraphrases the administration’s plan to push them down and hold them down.
Some of this is normal – keeping government borrowing costs down has been part of the job for a long time – but Benchent’s fixation on benchmarks was very intense, and he forced him on Wall Street to tear his 2025 forecast.
The main rate strategists in the past few weeks Barclays, Royal Bank of Canada and General Association They said that because of Bescent’s campaign to make them lower, they reduced part of their year-end forecast part of their 10-year yield, partly because they made them lower. It adds that Bessent can follow not just with jaws, but with concrete actions such as limiting the size of a 10-year debt auction, increasing demand for bonds, and advocating loose banking regulations to support Elon Musk’s.Desperate CampaignTo reduce the fiscal deficit.
“A previously often mentioned in the bond market is the idea that we don’t fight the Fed,” says Guneet Dhingra, head of US interest rate strategy. BNP Pariva sa. “We’re evolving to avoid fighting the Ministry of Finance.”
The yield has already declined, earning half-cent points in similar amounts over the past two months, ten years and the rest of the financial curve.
To be clear, that sharp move is not about Bescent, but about his boss, President Donald Trump. President Donald Trump has caused fears of a recession, causing tariffs and trade wars to drive investors from stocks to bond safety. It’s not exactly like the bond rally that Bescent had in mind – he hopes it is a product of fiscal discipline and sustainable economic growth – but it was only added among some people in the market where the administration would somehow cut yields.
A representative from the Treasury did not respond to requests for comment.
Of course, many can cancel Bessent’s plans and send fresh signs that rebounds in the stock market, inflation rates remain stubbornly high, or Musk and his Doge team will cut their spending.
In a recent interview with Breitbart News, Bessent expressed confidence that budget cuts are important enough to drive a “natural decline in interest rates,” and helped to stimulate the private sector, reflecting the arguments he has appeared in.CBSat CNBC and New York Economic Clubs.
In addition to cutting spending, the decline in taxes and policies aimed at lowering energy prices are aimed at increasing economic output while reducing inflation.
“They have a kind of cap yield,” said Subadra Rajappa, head of Socgen’s US fare strategy, cut their year-end forecast to 3.75% in three-quarters of the decade. “If the yields start to drift above 4.5%, I think they’re going to make Joe Bonn and make sure they’re reemphasizing that they’re focusing on reducing their debt, deficits and spending.”
This kind of speculation has produced the so-called Bescent idea put into the bond market, the famous Greenspan (named after former Federal Reserve Chairman Alan Greenspan), where central bank interventions become very related to stock market drops.
Dhingra recommends that clients purchase 10-year inflation link notes due to part of Bessent’s commitment to curbing long-term yields. But it wasn’t just the words of a former hedge fund manager that convinced him.
Last month bescentThe revealed planThe incredible Wall Street dealership, which predicted supply increased later this year, will not change long-term debt sales for the next few quarters. It was kind of a thing after he criticized his predecessor Janet Yellen on a campaign trail to manipulate bond issuances in order to keep borrowing costs low ahead of the election and keep the economy in juice.
He also supportedreviewSupplementary leverage rate of the Fed. Wall Street Bond dealers have cited the burdens they face in the Treasury market for many years to increase the amount of capital they have to put aside when holding debt.
“Bessent not only brought about verbal interventions, but also concrete actions. This supports moving bond yields lower,” Dhingra said. “This is a bond vigilante government that keeps the bond vigilantes at bay.”
For Blake Gwinn, RBC Capital Markets’ US fare strategy, it has cut its 10-year yield forecast to 4.2% from 4.75% earlier this month, as it is likely to cause a Bescent push, with the potential negative impact of Trump’s tariff policy on growth.
“The administration has almost a cap of 10 years of yield,” Gwynn said. “They say it implicitly. If a decade starts to rise, or if the economy starts to stumble and the Fed isn’t playing ball, we’re just going out and cutting back on the 10-year problem.”
This story was originally introduced Fortune.com