Treasury and Fed Pull ApartOn August 19, Scott Bessent doubled Treasury buybacks to $4 billion a week. The 30-year yield fell about 10 basis points, then reversed. The 10-year reached 4.704% and the 30-year 5.248%.
The pressure is structural: US debt has crossed $40 trillion, the deficit is on pace for $1.9 trillion, and tech companies are issuing debt for AI and data centers.
On August 28, Kevin Warsh called the 2% inflation target firm and fixed and would not rule out a September hike. Yields rose again, erasing Bessent’s gains.
Japan faces a similar conflict. The Bank of Japan is hiking rates while the government spent 15.4 trillion yen on intervention. The yen still trades above 160 per dollar.
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