NEW YORK: Treasury Secretary Scott Bessent says he spoke with Stanley Druckenmiller after his former mentor criticised his recent bond-market intervention, and touted that treasuries might have outperformed because of that same action.
“Stan’s a great investor. He changes his mind a lot, and he doesn’t like losing money. I think he lost money the day he sent in the editorial,” Bessent said on CNBC on Monday of the billionaire investor’s stinging critique in the Wall Street Journal.
Druckenmiller said that policymakers should let the bond market do its job, after Bessent’s department announced a surprise expansion of its buyback programme for outstanding securities.
“Hedge fund managers like to speed things up,” Bessent said, whereas he said his job is to “speed things down”.
He said his aim is to make sure market participants know that things aren’t a one-way trip, and that they’re “looking at fundamentals, and that the market does not dictate policy”.
The treasury chief said that US treasuries are set to outperform other major bond markets this month, and highlighted that 10-year yields are roughly flat since President Donald Trump took office.
US 10-year yields topped 4.75% earlier on Monday, the highest level since January 2025, as rising oil prices bolstered expectations that the Federal Reserve (Fed) will hike interest rates.
The 10-year benchmark is up about two basis points for the month of August, compared with more than 10 basis points for German 10-year yields and 15 for Japanese ones.
“I’m fine with it. The market is the market,” Bessent said when queried on recent moves.
He also rejected the idea that he and Fed chairman Kevin Warsh have divergent views on treasuries.
“Of course we’re on the same page,” he said. Asked what that meant, he said “we both believe that the US bond market is the most resilient in the world”.
Warsh in a keynote speech last Friday said “the Fed needs clear market signals, as unfiltered as possible”
Some market participants have said Bessent’s moves have amounted to an attempt to reduce yields in a pre-election effort to contain borrowing costs.
“I didn’t say I was trying to change the direction” for US treasuries, Bessent said.
Asked about his reading on the market’s reaction to the buyback announcement, Bessent said: “I’ll give you the counterfactual – What if I hadn’t done it?
“That’s why we’re the best performing bond market this month, perhaps,” he said.
Turning to the currency market, Bessent was asked about the yen’s drop since the US engaged in joint intervention to buy the Japanese currency on July 31.
“I can’t affect the natural equilibrium. What we can do is send a signal,” he said.
“I have information that the market doesn’t have, and it’s my belief that the Japanese government and the Bank of Japan (BoJ) will do the things that will lead to a stronger yen.”
Asked about the BoJ’s likelihood to raise interest rates, Bessent said: “I think the market’s pricing that now.”
Bessent appeared to signal a delay, meantime, in a coming fiscal presentation.
On Aug 20, he said, “We are announcing probably at the end of this week, beginning of next week, an increased focus on fiscal consolidation.”
But on Monday, he indicated that such an announcement may be months away. — Bloomberg
