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Druckenmiller warns Bessent against trying to suppress US bond yields
Druckenmiller argues the Treasury should focus on cutting the budget deficit, pointing to a brief yield drop after Bessent expanded buyback capacity that quickly reversed.
Billionaire investor Stanley Druckenmiller, a former colleague and mentor to US Treasury secretary Scott Bessent from their time at George Soros’s firm, has warned that efforts to calm bond markets by pushing down US yields risk backfiring. In a Wall Street Journal op-ed, Druckenmiller said Washington should “Let the bond market speak,” rather than expand buybacks aimed at lowering the government’s borrowing costs.
Druckenmiller said higher borrowing costs, reflected in bond yields, should be a signal for fiscal action, arguing that the US needs to cut the budget deficit instead of interfering in markets to bring yields down again. He called the long term Treasury yield the most important global price and the only remaining fiscal disciplinarian, while noting that neither party will campaign on entitlement reform.
His comments also followed Bessent’s decision to increase the maximum size of Treasury buyback operations, from $2 billion to $4 billion. Druckenmiller said the initial, brief drop in long term bond yields was followed by a quick reversal, characterizing the move as price management rather than liquidity management and calling it a larger mistake than the $4 billion figure suggests.
The op-ed comes as CNBC reported Bessent could potentially add to bond-buying firepower by using the Treasury’s near-$1 trillion General Account at the Federal Reserve. The Guardian Economics piece also notes that the US national debt has reached $40 trillion, and that the annual deficit is expected to hit $2 trillion.