Bonds sharply sold off and stocks tumbled Wednesday after Treasury Secretary Scott Bessent’s latest effort to tamp down what he called market “fever” backfired.At 11 a.m.ET, the Treasury Department announced that it would repurchase $6 billion worth of 10- to 20-year government bonds, in the hopes that fewer bonds on the market would drive up demand, pushing down rates, or yields, that have soared to levels not seen in decades.But that’s not what happened.
Instead, most Treasury yields sharply jumped on the announcement.The 10-year bond yield surged to as high as 4.85%, its highest level since November 2023.
The 20- and 30-year bond yields surged to as high as 5.3%.When Treasuries fall, their yields rise.The Nasdaq Composite, which is sensitive to interest rates given the high number of major tech companies it tracks, was down 0.8% at midday.
The S&P 500 tumbled 0.6%.The reaction from Wall Street underscores the limits of the power Bessent claims to exert over markets.
It also comes as the Trump administration is running out of tools to gain leverage over major parts of the U.S.economy, from gas prices and bond yields to retaliatory tariffs.Yields have been rising steadily since the start of the year.
But they began to surge in late July, when President Donald Trump’s newly-installed Federal Reserve chairman, Kevin Warsh, held a press conference at which he didn’t sound fully committed to using the Fed’s tools to help curb inflation.That spooked bond markets, which saw inflation climbing as the Iran war dragged on and Trump’s trade policies raised the prices of many imported goods.
“There was, like, this fever that was building,” in the bond markets, Bessent said Tuesday, appearing to suggest that yields had risen largely because of the “financial press.” “They get a hold of a narrative, and I wanted things to become more fact-based,” he told Breitbart.“My job is to try to push things back towards equilibrium.”But it is this...