The Bessent Put: Can policymakers stop bond yields rising?

The Treasury may contain the rise in long-term yields temporarily, but it cannot eliminate the fiscal and borrowing pressures that ultimately determine the price of capital.

• US Treasury yields continued rising even after oil stabilised at around $80 per barrel following the Iran conflict, shifting investor attention from inflation to who will finance growing borrowing needs.
• Governments are running persistent fiscal deficits while technology companies are undertaking a major AI infrastructure cycle involving data centres, semiconductors, networking equipment and power generation, increasing debt-market supply and demand for capital.
• Scott Bessent is favouring short-dated Treasury issuance and has expanded buybacks of older bonds; this reduces duration supply and may limit upward pressure on long-term yields, although the sums remain small relative to the Treasury market.
• Stanley Druckenmiller argues that suppressing yields while growth is robust and unemployment is low could hide the market signal from rising deficits and debt, unlike interventions during crises such as wars or recessions.
• Treasury tools can influence markets only at the margin because sustainable control of long-term rates would require the Federal Reserve's balance sheet; Kevin Warsh is portrayed as more willing than Bessent to let markets price capital.

Takeaway: W1M is relatively neutral on US duration and favours TIPS because real yields remain attractive, while expecting range-bound yields; if policymakers limit increases, adjustment may instead appear through a weaker dollar, higher inflation expectations or stronger gold performance.