{"id":35696,"date":"2026-08-21T20:03:42","date_gmt":"2026-08-21T20:03:42","guid":{"rendered":"https:\/\/investmentbankingrules.com\/?p=35696"},"modified":"2026-08-21T20:03:42","modified_gmt":"2026-08-21T20:03:42","slug":"rearranging-deckchairs-on-the-titanic-bonds-erase-the-impact-of-treasurys-intervention","status":"publish","type":"post","link":"https:\/\/investmentbankingrules.com\/?p=35696","title":{"rendered":"\u2018Rearranging deckchairs on the Titanic\u2019: Bonds erase the impact of Treasury\u2019s intervention"},"content":{"rendered":"
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Bond yields jumped Thursday, erasing the declines stemming from the Treasury Department\u2019s unusual intervention in the debt market a day earlier.<\/p>\n

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The 10-year Treasury bond yield rose as high as 4.71%, its highest level since Tuesday. The 30-year yield spiked to as high as 5.267%, rising just above the level yields were at when the Treasury Department took action Wednesday. <\/p>\n

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Yields declined somewhat over the course of the morning but spiked back up after Treasury Secretary Scott Bessent appeared on CNBC and teased even more bond repurchases.<\/p>\n

\u201cI would note that it could be more than the $4 billion\u201d Treasury originally announced, he said.<\/p>\n

By the end of the trading day, the 10-year yield was back at 4.70% and the 30-year was at 5.25%.<\/p>\n

\u201cAgain, we have a big tool kit\u201d to lower rates. \u201cPart of it is signaling,\u201d Bessent said.<\/p>\n

As yields rose following Bessent\u2019s interview, stocks fell. The S&P 500 ended the day down 0.8% and the Nasdaq Composite fell 1%. The Dow ended the day lower by 700 points or 1.3%.<\/p>\n

Meanwhile, oil prices accelerated again. U.S. crude oil briefly touched $89 per barrel, although it closed at $87.83, up 2.3% for the day. International oil benchmark Brent also rose more than 2% and closed at $93.78. The move higher in energy prices came after President Donald Trump threatened \u201ceconomic warfare\u201d on Iran. Gas prices also rose: The national average jumped another 2 cents from Wednesday to $4.10 per gallon.<\/p>\n

Bessent\u2019s interview did not help to contain oil prices. \u201cThis Iran conflict, we will get on the other side of this,\u201d he said, but \u201cwe don\u2019t know when.\u201d <\/p>\n

Bessent announced he would hold a news conference Monday \u201cto talk about exactly what we\u2019re going to do\u201d to increase economic pressure on Iran in the hopes of persuading the country to fully reopen the Strait of Hormuz.<\/p>\n

\u201cThis is going to be the greatest coordinated economic isolation in the history of the world,\u201d he said.<\/p>\n

Asked about the latest oil price hikes Thursday, Bessent conceded, \u201cI\u2019m not sure why oil has popped up.\u201d <\/p>\n

He also claimed to have \u201casymmetric information\u201d that he said was better than what investors and traders have. This, he said, was the reason his assessment of the Iran situation was so different from the prevailing market view.<\/p>\n

\u201cWe are announcing \u2014 probably at the end of this week, beginning of next week \u2014 an increased focus on fiscal consolidation,\u201d Bessent said on CNBC. He did not provide further details except to say that the White House budget office director, Russell Vought, \u201cknows more about the intricacies of the budget\u201d than anyone else.<\/p>\n

Asked if the government\u2019s budget deficit has peaked, Bessent responded, \u201cI think [it\u2019s] a very good chance we have.\u201d The Trump administration would soon be \u201claser-focused\u201d on the issue, he said.<\/p>\n

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The government\u2019s outstanding debt has risen by more than $3.8 trillion since Trump began his second term in January 2025.<\/p>\n

The Treasury Department\u2019s surprise announcement Wednesday effectively meant that it would be a bigger buyer of longer-term bonds. Bonds rallied and yields dropped on the news, but the impact was short-lived.<\/p>\n

ING analysts said the move was \u201clike rearranging deckchairs on the Titanic,\u201d given the country\u2019s growing debt.<\/p>\n

On Wednesday afternoon, the Treasury Department also revealed that outstanding national debt had topped $40 trillion for the first time. Interest payments on the national debt are on track to surpass Medicare as the government\u2019s single greatest line-item expense.<\/p>\n

\u201cAbsent real fiscal consolidation, we fear the markets will view this action as lacking credibility, meaning this could contribute to higher term premium and yields over time should Treasury become more opportunistic in its approach to debt management and move further away from its \u2018regular and predictable\u2019 tenet,\u201d JPMorgan Chase\u2019s global rates team wrote in a note late Wednesday.<\/p>\n

The timing of the announcement was also \u201chighly unusual\u201d because it came just two weeks after Treasury had released its funding plan. \u201cWe can find nothing in market functioning that would force\u201d an announcement like this, they wrote.<\/p>\n

Ed Yardeni, president of Yardeni Research, said Wednesday he saw the move by Bessent as a sign \u201cthat he will do whatever it takes to keep a lid on bond yields.\u201d <\/p>\n

Bessent has been intensely focused on bond yields and the knock-on effect they have for consumers ever since he took the reins at the Treasury Department. Consumer borrowing rates move in lockstep with the yield on the 10-year Treasury note.<\/p>\n

Asked Wednesday afternoon whether Americans should be concerned about the bond market, Trump told reporters, \u201cNo, I don\u2019t think so.\u201d<\/p>\n

Experts warned that the Treasury Department\u2019s move could have other consequences. <\/p>\n

\u201cIncreased Treasury activism \u2014 if sustained \u2014 could also make the dollar less attractive,\u201d analysts at Evercore ISI wrote. The dollar index, which measures the dollar\u2019s strength against a basket of foreign currencies such as the pound, euro and yen, has fallen nearly 1% since Wednesday morning.<\/p>\n

Evercore\u2019s analysts also concurred that \u201cthe impact is likely to be short-lived unless fundamentals change.\u201d <\/p>\n

The average 30-year fixed mortgage rate posted a small drop Wednesday, according to Mortgage News Daily data, but that decline was reversed Thursday afternoon. <\/p>\n

This post appeared first on https:\/\/www.nbcnews.com<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Bond yields jumped Thursday, erasing the declines stemming from the Treasury Department\u2019s unusual intervention in the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[230,232],"tags":[],"class_list":["post-35696","post","type-post","status-publish","format-standard","hentry","category-editors-pick","category-stock"],"_links":{"self":[{"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=\/wp\/v2\/posts\/35696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35696"}],"version-history":[{"count":0,"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=\/wp\/v2\/posts\/35696\/revisions"}],"wp:attachment":[{"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investmentbankingrules.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}