'Bessent Is a Political Actor': Treasury Move on Bond Market Seen as Midterm Damage Control

The Trump administration on Wednesday unveiled a plan to ease upward pressure on the cost of US debt by doubling its bond buybacks through November.

In announcing that it will buy back "at least" $4 billion worth of bonds over a two-month period, the US Department of Treasury said it was seeking "to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants."

While the announcement did result in interest rates for US treasuries dropping, economists and other political observers are warning that Treasury Secretary Scott Bessent's scheme to stop spiking yields will prove ineffective over the long term.

In a Wednesday interview with NOTUS, Joseph Brusuelas, principal and chief economist for RSM US LLP, said that Bessent was making decisions based solely on the political fortunes of the Republican Party.

"Bessent is a political actor," Brusuelas said. "His interest is purely short-term and is organized around the upcoming election and not a return to price stability. This is what fiscal dominance looks like as the fiscal authority leans on the central bank to subordinate its goal of price stability to the government’s borrowing and political needs."

The economist's analysis was echoed by Drop Site News reporter Ryan Grim, who argued in a social media post that President Donald Trump's administration was scrambling to save its endangered GOP congressional majority.

"Trump is going to pump billions of dollars into the bond market to push down interest rates through the election, then let everything fall apart again," Grim wrote. "Not sure I’ve seen a more nakedly electoral use of this amount of money before, for such a targeted amount of time."

Krishna Guha, head of global policy and central bank strategy at Evercore ISI, argued in a Wednesday research note flagged by CNBC that the bond buyback scheme "changes almost nothing in terms of the fundamentals in particular the unchanged need to finance the tidal wave of hyperscaler debt in addition to very large government deficits."

Adam Josephson, founder of Sakonnet Research, also expressed skepticism of the buyback plan's effectiveness in a Wednesday interview with Politico.

“They’re trying everything possible to limit upward pressure on long-term yields,” Josephson said. “Nothing has worked. And why would this work? It’s too small to matter.”

Experts say that bond yields have been spiking to highs not seen since the start of the Great Recession due to investor anxiety over a number of factors, including inflation, the size of the US government's debt, and Trump's illegal war with Iran.