\u201cGovernments defending prices against fundamentals always lose. The only variable is how much they spend before conceding,\u201d he wrote.<\/p>\n
Druckenmiller argued that Washington should heed the rise in borrowing costs \u2013 measured by bond yields \u2013 and take steps to cut the budget deficit, rather than interfering in the market to push yields down again.<\/p>\n
\u201cThe long-term Treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the US has left. Neither party will run on entitlement reform. Both have spent the past decade expanding commitments while ignoring arithmetic,\u201d he wrote.<\/p>\n
Druckenmiller\u2019s intervention comes after Bessent decided to at least double the maximum size<\/a> of the Treasury\u2019s buyback operations, from $2bn (\u00a31.5bn) to $4bn. That move briefly led to a drop in US long-term bond yields, but this quickly reversed.<\/p>\n \u201cThe market\u2019s verdict was swift and correct: This wasn\u2019t liquidity management, it was price management \u2013 and a mistake far larger than $4bn suggests,\u201d Druckenmiller said.<\/p>\n Bond yields fall when prices rise, and vice versa.<\/p>\n Yesterday, CNBC reported that Bessent could increase his bond-buying firepower by conducting purchases using the Treasury\u2019s near-$1tn General Account, a government fund held at the Federal Reserve.<\/p>\n Last week the US national debt hit $40tn, and rising, and the annual deficit is expected to hit $2tn this year.<\/p>\n Addressing this primary deficit is the \u201conly thing that durably lowers long-term yields\u201d, Druckenmiller wrote in the WSJ.<\/p>\n \u201cThe reward is enormous: A credible fiscal package would do more for the long end of the curve than a buyback program 1,000 times this size,\u201d he said.<\/p>\n skip past newsletter promotion<\/a>Free newsletter | Every weekday<\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n after newsletter promotion<\/p>\n Bessent\u2019s bond market intervention is a signal that \u201cWashington is increasingly uncomfortable with soaring long-term borrowing costs,\u201d said Axel Rudolph, the chief technical analyst at the investing and trading platform IG.<\/p>\n Bessent\u2019s attempts to battle the financial markets are ironic, as he worked alongside Soros when he beat the Bank of England and forced the pound to crash out of the European exchange rate mechanism in 1992.<\/p>\n That drama, which became known as Black Wednesday<\/a>, showed how hard it is for a government to defend a currency when investors believe it is overvalued.<\/p>\n But despite that experience, Bessent took part in a joint operation with Japan to prop up the yen earlier this month \u2013 seemingly to prevent Tokyo selling US bonds to fund yen purchases.<\/p>\n \u201cThe irony of the guy working for Soros and Druckenmiller who broke the Bank of England back in 1992 pretending that you can do FX intervention alone, and lastingly defend a currency, is just amazing,\u201d Adam Posen, the president of the Peterson Institute and an expert on the Japanese economy, told the Financial Times earlier this month<\/a>.<\/p>\n Rising geopolitical tensions have pushed bond yields higher, as the failure of the US-Iran peace talks lifted the oil price \u2013 which threatens to drive inflation higher.<\/p>\n The collapse of US-Canada trade talks last weekend has also put foreign policy back in the spotlight, weakening the Canadian dollar. A North American trade war could hurt US growth, creating more fiscal pressure.<\/p>\n","protected":false},"excerpt":{"rendered":"Scott Bessent\u2019s attempt to calm the bond markets and push down America\u2019s cost of borrowing have attracted a…\n","protected":false},"author":2,"featured_media":579822,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[138,111,139,69],"class_list":["post-579821","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/579821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=579821"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/579821\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/579822"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=579821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=579821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=579821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/06\/1782306309_592_500.jpg\")
<\/p>\n