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The oil and bond markets moved against the efforts of the US Treasury Secretary, after 10-year yields surged to 4.85%, the highest in three years, amid pressure from the ongoing war with Iran and the budget deficit.
On September 10, 2026, at 6:35 AM, Bloomberg News reported that U.S. Treasury Secretary Scott Basen is facing a test from financial markets after repeatedly warning investors that betting on pushing up oil prices, depressing the yen, or driving up U.S. bond yields may be a mistake, as the government possesses information about its policy plans that market investors are not yet aware of.
Bescent, a former hedge fund manager, calls this advantage "asymmetric information" in game theory, where each party has unequal access to information. Over the past three weeks, he has publicly discussed this concept at least four times. Most recently, on Tuesday, Bescent even challenged investors in the financial markets, saying they could bet against him if they wanted to.
However, investors began to accept the challenge, particularly in the bond and oil markets. Even in the yen market, the United States stepped in to support the Japanese authorities' efforts.
Ever since Bescent began signaling pressure on the oil and bond markets—families directly impacting American living costs ahead of the midterm elections—market movements have gone against his wishes.
Brent crude oil prices surged above $100 per barrel, pushing up gasoline prices in the United States. Meanwhile, the yield on 10-year US Treasury bonds , a key benchmark for mortgage loans and other borrowing costs, jumped to 4.85%, the highest in three years, after approximately two weeks of continuous selling in the bond market.
Importantly, the surge in bond yields occurred even though the U.S. Treasury Department increased the size of its repurchase agreement program in an attempt to push down long-term bond yields, but the result was the opposite.
This situation is beginning to reflect the risks of Bescent's verbal intervention strategy, which is similar to President Donald Trump's approach, because verbal signals remain effective as long as investors believe the government has strong enough measures in place to back up those statements.
But the key factors driving both oil prices and bond yields higher are the U.S. budget deficit and the conflict with Iran, factors that Basen has limited control over.
Mark Spindel, founder and chief investment officer of Potomac River Capital, believes the market has played his card, pointing out that the high federal government budget deficit, coupled with concerns about the Federal Reserve's (Fed) ability to control inflation, weighed more heavily on the markets than Bescent's efforts.
In the past, several governments and central banks have successfully intervened in markets, such as the Plaza Accord in the 1980s which helped depress the dollar, or the European Central Bank's (ECB) declaration in 2012 that it would do everything necessary to stabilize the euro, as well as the Bank of Japan's (BOJ) yield curve control policy.
However, a key difference is that such interventions are typically supported by central banks with larger policy tools and power, while Bescent's tools are more limited. The Trump administration was facing a nearly $2 trillion budget deficit, along with energy shocks from the Iran conflict, both factors driving U.S. bond yields higher steadily over the past six months.
Bescent has repeatedly emphasized that he doesn't focus much on short-term market volatility, but rather wants to cool down the market's overheating and encourage investors to prioritize fundamentals.
However, his attempts to signal pressure on the bond market have been questioned by Wall Street, as such measures have not addressed the fundamental factors driving bond yields up.
Earlier, Bescent surprised the market by announcing an increase in Treasury bond repurchases, stating that market yields did not reflect true fundamentals and signaling that the government would soon unveil further fiscal plans. However, those plans have yet to materialize.
Michael Strain, director of economic policy studies at the American Enterprise Institute, stated that, in his assessment, Bescent has attempted three times to manipulate long-term bond yields in his desired direction but has been unsuccessful. He also believes that this situation is beginning to affect the credibility of the U.S. Treasury Secretary.
Nevertheless, Bescent's intervention was not a complete failure. By cooperating with Japan to prop up the yen, it helped the yen appreciate rapidly and may have reduced pressure on Japanese authorities to sell US bonds in order to use the dollar to protect their own currency. Furthermore, Bescent also played a role in helping to prevent the financial crisis in Argentina last year.
The U.S. Treasury Department also has the option to increase the amount of bond repurchases or reduce the size of long-term bond issuances in an attempt to prevent yields from rising further.
Bank of America strategists believe that increasing the size of its bond repurchase program may be just the beginning of a more aggressive U.S. policy to limit rising long-term bond yields. Some analysts expect Bescent may increase its measures if the 30-year Treasury yield approaches a key level of 5.3%, which stood at 5.29% late Wednesday.
Citigroup strategists have stated that investors should not overlook the "bessent put," or the possibility that the Treasury Department will intervene to support the market if the situation worsens.
Bassent himself has firsthand experience with the risks of government market intervention, dating back over three decades. He made a name for himself for his involvement with George Soros in a bet that the Bank of England's attempts to defend the pound would fail.
Furthermore, Bescent stated early last year that the bond market would be one of the most important indicators of his success, predicting a decline in 10-year bond yields if the government could control its budget deficit and generate economic growth under low inflation.
Although bond yields had previously fallen, they surged again after Trump launched a war with Iran in late February, before selling intensified in July due to concerns about the credibility of new Fed chair Kevin Warsh's ability to combat inflation.
Meanwhile, Bescent also played a key role in implementing economic sanctions to accelerate the end of the Iran war under the "Economic Outcast" plan, which threatened to impose sanctions on banks and organizations worldwide that continued to do business with Iran.
Prior to the launch of the plan, Bescent had stated that the market was misinterpreting the direction of oil prices, reiterating that the government possessed asymmetric information. However, no significant measures have been taken against Iran's main trading partner, China, since then, while oil prices have continued to rise.
Stephen Mirow, managing partner at Beacon Policy Advisors and former U.S. Treasury official, views Bescent's recent statements as similar to Trump's approach, which has repeatedly declared victory over Iran near even as the war drags on, and warns that using such rhetoric is risky if the markets continue to move against the government.
However, Nathan Thuft, Chief Investment Officer of Multi-Asset Solutions at Manulife Investment Management, believes Bescent still has enough credibility, policy tools, and market influence to make investors think carefully before making a big bet—a view he holds.
Ultimately, however, financial markets often test the capabilities of policymakers, and Bescent's ammunition is not without limit.
Reference: www.bloomberg.com
