Bessent's Bond Yield Strategy 'Not Working' as US Treasuries Surge

The Quick Take

• Treasury Secretary Scott Bessent's strategy to cap US bond yields via buybacks is 'not working,' according to Australian financial press
• Bessent, touted as Trump's 'top bond salesman,' is facing a market reality check as yields continue rising despite the buyback programme
• The programme's failure to contain yield increases is complicating the US debt refinancing strategy amid rising deficits

US Treasury Secretary Scott Bessent's strategy to suppress long-term US bond yields through targeted buybacks is facing its first significant credibility test, with Australian financial media reporting that the programme is not working as intended. Bessent, who entered his role touting the ability to manage the US yield curve, has been unable to prevent the 10-year Treasury yield from rising despite active buyback operations, as stronger-than-expected inflation data and surging oil prices overpower the Treasury's intervention.

The strategic context matters: Bessent's yield-management ambition was premised on buybacks improving market liquidity and reducing term premium in long-dated Treasuries. However, when fundamental inflation drivers — particularly oil at $100+ and sticky core services — dominate the market, liquidity operations cannot mechanically suppress yields. Markets are pricing in both a near-term Federal Reserve rate hike and continued inflation risk, which structurally pushes yields higher regardless of the Treasury's buyback volume.

The forward implication for Australian investors is that rising US Treasury yields are tightening global financial conditions, with the Australian 10-year bond market repricing higher in sympathy. The RBA's own rate outlook — Citi forecasts two more hikes — compounds this. Australian REITs, utilities, and leveraged businesses face a dual pressure: higher domestic rates from the RBA and higher global risk-free rates from the US Treasury. Watch the next Treasury buyback announcement for any sign of a programme scale-up.

Synthesized from 2 sources.