- Buyback could be more than 4 billion
- Part of it is signalling
- We want to show that yields do not reflect underlying fundamentals
- Probably going to announce increased focus on fiscal consolidation
- Nothing magic about $40 trillion debt number
- Expect tariff 2026 income will be similar to 2025
- Very good chance we’ve seen peak deficit
- Market got a little ahead of itself
- Treasury and the Fed would work together if any change in balance sheet
- Rates have nothing to do with the buyback decision
- We would adjust to any kind of Fed bond runoff
- We will see what the conditions are in the bond market and whether more action will be needed
- Need to focus on the fundamentals
- We’re trying to keep the market in equilibrium
On Iran:
- Press conference on Monday to discuss actions
- Maximum economic pressure means likely not a kinetic restart
- Oil markets are misinterpreting what economic pressure means
- There will be coordinated economic isolation
- If countries insist on doing business with Iran, US will enforce actions against them
- Action will curtail Iran’s ability to take action through proxies
- Going to have the toughest sanctions in history
- We are going to collapse this regime
- On whether Iran actions will include China, Bessent said “some conversations better to be private”
- Confident that everyone, including China, wants to see Hormuz strait reopened
Speaking in an interview with CNBC, US Treasury Secretary Scott Bessent suggested the US Treasury could expand its bond buyback operations beyond the currently announced $4 billion level, stressing that part of the program is intended to send a message to markets that elevated Treasury yields do not accurately reflect underlying economic fundamentals.
Bessent said markets may have “got a little ahead of themselves” and reiterated that rising yields were not the driving force behind the buyback decision. He added that the Treasury would adapt to any future changes in the Federal Reserve’s balance sheet policy and would work closely with the Fed if adjustments to bond runoff plans became necessary.
On the fiscal outlook, Bessent indicated that the administration is likely to place greater emphasis on fiscal consolidation, arguing there is “nothing magic” about the US debt surpassing $40 trillion. He also expressed confidence that tariff revenues in 2026 will be comparable to 2025 levels and suggested there is a “very good chance” the federal deficit has already peaked.
Turning to geopolitics, Bessent outlined an aggressive economic strategy toward Iran, ahead of a planned press conference on Monday. He stressed that “maximum economic pressure” should not be interpreted as a return to military action, arguing that oil markets have misunderstood the administration’s intentions.
Instead, Bessent said the US will pursue coordinated international economic isolation of Iran and enforce penalties against countries or institutions that continue doing business with Tehran. He described the upcoming measures as potentially the toughest sanctions in history, aimed at weakening Iran’s ability to operate through regional proxy groups and ultimately destabilizing the regime.
When asked whether China could be targeted as part of the sanctions effort, Bessent declined to provide details, saying that “some conversations are better to be private”. However, he expressed confidence that all countries, including China, share an interest in seeing the Strait of Hormuz remain open to global trade.
This article was written by Giuseppe Dellamotta at investinglive.com.