(Bloomberg) — The yields on the longest-dated US government bonds shot back to levels seen just before Treasury Secretary Scott Bessent shocked markets last month by expanding a buyback program in an effort to halt the rise.
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The gambit worked briefly, until the selloff that’s been sweeping through global markets resumed. By Tuesday, that drove 30-year Treasury yields over 5.28%, the level seen before Bessent announced his move on Aug. 19.
The bounceback signals a clear message from the world’s most influential bond market: It’ll take more than an out-of-schedule tweak to the Treasury’s buybacks to soothe investors worried about the surging national debt and persistently elevated inflation. Yields on 30-year bonds remain just shy of the 19-year high hit before the Treasury’s intervention.
“The rates market has not been able to hold any type of significant rate decline,” said Mark Cabana, head of US rates strategy at Bank of America. “Investors demand the greatest compensation to extend that far out.”
Yields on benchmark 10-year Treasuries, meanwhile, climbed to about 4.8%, the highest since January 2025, shortly before President Donald Trump’s return to the White House. Two-year yields, most sensitive to the Federal Reserve’s policy, were up six basis points on Tuesday at 4.4% as traders priced in a roughly 70% chance that the central bank at this month’s meeting will raise interest rates for the first time since 2023.
The pressure extended to long-dated bonds around the world, due to the same concerns about the oil-driven inflation shock and massive government deficits. Germany’s 30-year yields touched the highest since 2011, and the equivalent UK rate rose to a level last seen in 1998. Australian peers set a fresh record high in data going back to 2016, while the yield on a Bloomberg index of global sovereign bonds climbed the highest in almost two decades.
Bessent has shrugged off the moves and previously characterized his steps as an effort to nudge a market that had gotten out of whack and untethered from its fundamentals. “I’m fine with it,” he said on CNBC this week. “The market is the market.”
He echoed that on Tuesday, downplaying the bond market selloff in an interview with a Fox Business news host by saying, “I don’t think we are in any kind of a dire situation.”
Still, those pressures — which are keeping US yields at elevated levels — seem to be creating a headache for Bessent, who has touted a “big toolkit” at the Treasury’s disposal to keep yields in check. Pulling down yields — and in turn, the cost of mortgages and other loans — has been a stated goal of the Trump administration since early last year, though its heavy spending, tax cuts, tariffs and war against Iran have had the opposite impact.
“The only way a bluff works is if nobody at the poker table knows you’re bluffing,” Dan Morehead, founder and managing partner at Pantera Capital Management, told Bloomberg TV. “I think it just it backfired.”
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