The U.S. Treasury crisis remains unresolved, and Besant's actions have raised market concerns

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智通财经2026/08/24 09:26

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In recent months, US Treasury Secretary Bessent bet on falling interest rates by rolling over a large amount of maturing long-term treasuries into short-term bonds, hoping to refinance at lower rates in the future. However, things went contrary to expectations: 30-year and 10-year yields instead climbed to around 20-year highs, and federal debt interest payments have already far exceeded military spending.
Facing Trump’s dissatisfaction with high interest rates, Bessent adopted unconventional tactics, including conducting euro-yen currency swaps in an attempt to boost the yen and prevent Japan from selling US treasuries. However, this move was not communicated in advance with the European Central Bank, and its effect faded after just a few days.
Last week, Bessent operated again by selling short-term bonds and buying long-term bonds—a maneuver similar to quantitative easing, but on a tiny scale, only about $400 million. Compared to the over $30 trillion in debt held in the open market, this is negligible, and lacking the Federal Reserve’s money creation ability, the market reaction was tepid.
Trump’s tariff policies, fiscal expansion, the removal of climate subsidies, and continued military action against Iran are persistently driving up inflationary pressures, limiting the Federal Reserve’s room for rate cuts. Some board members are even inclined to raise rates, and the bond market harbors doubts about policy direction and corporate credit.
Analysts point out that in earlier years, Bessent had criticized similar maneuvers for distorting markets and profited by betting against the Bank of England’s interventions. The current repetition is damaging her credibility, and if market concerns are not alleviated going forward, debt costs may rise even further.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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The U.S. Treasury crisis remains unresolved, and Besant's actions have raised market concerns

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