Bessent Warned He Will ‘Lose’ Battle with Bond Markets

By Staff, Agencies

US Treasury Secretary Scott Bessent’s efforts to calm bond markets and lower US borrowing costs have drawn criticism from billionaire investor Stanley Druckenmiller, his former mentor at George Soros’s fund in the 1990s.

Writing in the Wall Street Journal, Druckenmiller warned that Bessent risks “losing” by trying to suppress US bond yields, arguing that Washington should instead “let the bond market speak” and address the growing budget deficit.

“Governments defending prices against fundamentals always lose,” Druckenmiller wrote, stressing that rising Treasury yields should be treated as a warning to reduce government spending rather than an incentive for further market intervention.

He described the long-term Treasury yield as the US’s most important financial price and its remaining source of fiscal discipline.

The warning came after Bessent at least doubled the Treasury’s maximum bond-buyback operations from $2 billion to $4 billion.

Although the move briefly pushed long-term yields lower, the decline quickly reversed.

Druckenmiller said the market viewed the intervention as “price management” rather than liquidity management.

Meanwhile, CNBC reported that Bessent could expand the Treasury’s bond-buying capacity by using its nearly $1 trillion General Account at the Federal Reserve.

The move comes as US national debt has reached $40 trillion and the annual deficit is projected at $2 trillion.

Druckenmiller argued that reducing the primary deficit is the “only thing that durably lowers long-term yields,” saying a credible fiscal package would have a far greater impact than even a massive buyback program.

The intervention also signals growing concern in Washington over soaring long-term borrowing costs, according to Axel Rudolph, chief technical analyst at trading platform IG.