Treasury chief's market moves raise credibility questions

When Scott Bessent was nominated to lead the U.S. Treasury, markets cheered. The veteran trader was seen as a steady hand who would temper the administration's fiscal impulses. Nearly two years later, that confidence is fraying.

Bessent's recent interventions in currency and bond markets have left investors puzzled. Rather than reflecting a coherent strategy, the moves appear reactive — attempts to calm jittery markets in the moment. The response to last week's announcement that the Treasury would double long-dated bond buybacks was telling: inflation expectations jumped, gold and crypto rallied, and the dollar slipped. The 10-year yield, a key benchmark for mortgages and corporate debt, reversed its initial dip and pushed toward recent highs.

That yield is Bessent's self-declared north star. When he was nominated in late 2024, it sat near 4.20%. Now it hovers around 4.75%, uncomfortably close to the 5% threshold. By his own metric, the mission is failing.

Bessent's room to maneuver is limited. The administration's spending trajectory remains expansive, with the deficit projected near 6.6% of GDP in fiscal 2026 — a level typically seen only during crises. Bessent has suggested the deficit may have peaked and that cutting waste could save hundreds of billions. But earlier efforts, including the DOGE initiative led by Elon Musk, yielded disputed savings of roughly $215 billion, a fraction of the budget, with the Government Accountability Office questioning the reliability of those figures.

With midterm elections approaching and the president's approval rating at 33%, pressure on Bessent is mounting. Analysts note the uncomfortable position of a Treasury secretary whose tools are limited while the political imperative to act grows. If market skepticism deepens, the credibility gap may widen further.