Treasury Secretary Scott Bessent can’t stop talking about 10-year bond yields. In speeches, in interviews, week after week, he states and restates the administration’s plan to push them down and keep them down.
Some of this is normal — keeping government borrowing costs in check has long been part of the job — but Bessent’s fixation on the benchmark US note is so intense that he’s forced some on Wall Street to tear up their predictions for 2025.
In the past couple weeks, chief rates strategists at Barclays, Royal Bank of Canada and Societe Generale have cut their year-end forecasts for 10-year yields in part, they said, because of Bessent’s campaign to drive them lower. It’s not just the jawboning, they added, but the fact that Bessent can follow it up with concrete action like limiting the size of 10-year debt auctions or advocating for looser bank regulations to boost bond demand or backing Elon Musk’s frantic campaign to cut the budget deficit.
“What used to be often mentioned in the bond market is the idea of don’t fight the Fed,” said Guneet Dhingra, head of US interest rates strategy at BNP Paribas SA. “It’s somewhat evolving into don’t fight the Treasury.”
Yields have come down already, plunging a half-percentage point on the 10-year — and by similar amounts across the rest of the Treasury curve — over the past two months.
That sharp move, to be clear, is less about Bessent and more about his boss, President Donald Trump, whose tariff and trade-war threats have sparked fears of a recession and pushed investors out of stocks and into the safety of bonds. That’s not exactly the kind of bond rally Bessent had in mind — he wants it to be the product of fiscal discipline and sustainable economic growth — but it has only added to the sense among some in the market that this administration is going to bring down yields one way or another.
A representative for the Treasury didn’t respond to a request for comment.
Any number of things, of course, could undo Bessent’s plans and send yields jumping back higher: a rebound in the stock market, fresh signs that inflation remains stubbornly high or setbacks Musk and his DOGE team have in reducing spending.
In a recent interview with Breitbart News, Bessent expressed confidence that the budget cuts will be significant enough to fuel “a natural lowering of interest rates” that helps revitalize the private sector, echoing an argument he’d laid in appearance on CBS, CNBC and at the Economic Club of New York.
In addition to spending cuts, lower taxes and policies aimed at reducing energy prices are intended to boost economic output while tamping down inflation.
“They’ve kind of capped yields,” said Subadra Rajappa, head of US rates strategy at SocGen, who cut her year-end forecast for the 10-year by three-quarters of a percentage point to 3.75%. “If they see yields start to drift higher than 4.5%, I think you are going to see them jawboning and making sure they reemphasize that they are focused on debt and deficits and cutting spending.”
This sort of speculation has given rise to the idea of a so-called Bessent put in the bond market, a riff on the famous Greenspan put (named after former Federal Reserve Chair Alan Greenspan) in which central bank intervention became highly linked to drops in the stock market.
Dhingra is recommending his clients buy 10-year inflation-linked notes, in part because of Bessent’s commitment to suppressing long-term yields. But it’s been more than just the former hedge fund manager’s words that have convinced him.
Bessent last month unveiled plans to keep sales of longer-term debt unchanged for the next several quarters, surprising Wall Street dealers who predicted supply increases later this year. It was an about-face of sorts after he criticized his predecessor Janet Yellen on the campaign trail for manipulating bond issuance in a bid to keep borrowing costs low and juice the economy ahead of the election.
He’s also backed a review of the Fed’s supplementary leverage ratio. Wall Street bond dealers have for years cited the burdens they face making markets in Treasuries due to the SLR, which boosts the amount of capital they have to put aside when holding the debt.
“Bessent has not only delivered verbal intervention, but also delivered concrete actions, which have supported bond yields to move lower,” Dhingra said. “This is a bond vigilant administration keeping the bond vigilantes at bay.”
For Blake Gwinn, head of US rates strategy at RBC Capital Markets, it was both the likely negative impact from Trump’s tariff policies on growth as well as Bessent’s push to bring yields down that prompted him to cut his 10-year yield forecast to 4.2% from 4.75% earlier this month.
“The administration has almost kind of capped 10-year yields,” Gwinn said. “They’re kind of implicitly saying, if 10-year start to move higher or the economy starts to stumble and the Fed’s not playing ball, we’re just going to go out and slash 10-year issues.”
