Scott Bessent’s Treasury buybacks are quietly undoing the Fed’s inflation fight

Treasury Secretary Scott Bessent just doubled the size of long-term debt buybacks, and the timing could not be worse for Federal Reserve Chair Kevin Warsh. On August 19, Bessent announced that operations targeting 10- to 30-year Treasury securities would jump from a maximum of $2 billion to at least $4 billion per operation, with the extended program running from September 9 through November 4. The stated goal is liquidity support for the long-term bond market. The practical effect is something quite different: it’s dragging down the very long-term yields that Warsh had been counting on to do part of the Fed’s job. A tale of two policy agendas Just weeks earlier, on July 29, Warsh used his FOMC press conference to highlight something he clearly liked. Long-term bond yields were climbing, with the 30-year Treasury yield reaching its highest level since 2007. For Warsh, this was a feature, not a bug. His interpretation was straightforward. Rising long-term yields meant markets were responding independently rather than following central bank signals. That fit neatly into Warsh’s broader philosophy of reducing the Fed’s heavy hand in markets and letting price discovery do more of the w...