Here is a fun way to think about the job of Treasury secretary. You cannot control the bond market — Scott Bessent said so himself this week, in an interview with Axios published on Saturday: “I can’t control the bond market. What I can do is get people to slow down and think.” So the job, or at least the public-facing part of it, is to stand in front of a months-long rout in Treasuries — one that briefly pushed the 10-year yield to its highest since 2002 this week — and get people to slow down and think.
And what Bessent would like people to think, specifically, is that the rise in yields is not about the United States. “I would be concerned if we were having some kind of idiosyncratic rise,” he said. “We’re not seeing people selling treasuries to buy German bonds or Japanese bonds.” Yields are going up everywhere, in other words, and a rise that happens everywhere is a global phenomenon, and a global phenomenon is not the Treasury secretary’s fault. There is a certain logic to this! If your house and every other house on the street is on fire, “my house is on fire” is less of an indictment of your housekeeping.
Still, it is worth listing what is pushing borrowing costs up, because the list is doing a lot of work in Bessent’s “nothing idiosyncratic here” framing. Per Bloomberg’s account of the interview, the culprits include elevated fuel prices from a protracted war with Iran, worries about US fiscal health, and surging artificial intelligence spending. One notes, gently, that “a protracted Iran war” and “US fiscal health” are not entirely exogenous events visited upon the Treasury by the universe. But the point stands that German and Japanese yields have been climbing too, and the US did, in fact, help Japan prop up its currency — including the two countries’ first coordinated yen-buying intervention since 1998. The world’s bond markets are having a shared experience.
Friday’s soft US jobs data brought some relief, which tells you something about the mood: the good news for bonds is that the economy might be cooling. Bessent’s counterargument is that the war’s ripple effects are masking underlying economic strength — he pointed to “strong” consumer spending and median wage growth running in line with headline inflation. Wages keeping pace with prices is, to be fair, a real thing and better than the alternative. It is also, one suspects, a tricky message to sell to voters currently paying record diesel prices and mortgage rates well above 7%, with a November midterm approaching in which Republicans face the risk of losing both chambers of Congress. “Your wages are keeping up with the inflation caused by the war” is a sentence that works better in a Treasury briefing than on a yard sign.
Could do it again
The other notable thing Bessent did was tout the administration’s rescue of Argentina as a model worth repeating. Last year the US bought pesos and extended the government of Javier Milei — a Trump ally — a $20 billion swap line, helping Argentina defend its currency and head off a full-blown crisis. Bessent’s verdict: “I would submit that the stabilization of Argentina has led to a sea change in Latin America, something generational or maybe the first time in history, that we’ve never had this many Latin American countries allied with the US. So could we do that again? Sure.”
There is a worldview packed into that paragraph. The traditional worry about lending $20 billion to Argentina is that Argentina has a long and storiedhistory of needing exactly that kind of money, repeatedly. Bessent’s reframe is that the swap line wasn’t really a bailout; it was alliance-building with an excellent return on investment — $20 billion for a generational realignment of a continent. If you think of the Treasury as an investor rather than a backstop, that is a trade. “Could we do that again? Sure” is the sound of a man who liked the last trade and would size up.
Whether the bond market shares his enthusiasm is a separate question, and one he conspicuously does not control. His job is to get people to slow down and think. The 10-year at a 24-year high suggests they are thinking about something.