(Bloomberg) — Treasury Secretary Scott Bessent said that any move to boost the share of longer-term Treasuries in government debt issuance is some ways off, given current hurdles that include elevated inflation and the Federal Reserve’s quantitative tightening program.
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“That’s a long way off, and we’re going to see what the market wants,” Bessent said in an interview with Bloomberg Television’s Bloomberg Surveillance on Thursday, when asked about “terming out” sales of US Treasuries sales. “It’s going to be path dependent.”
Before he came into office, Bessent had repeatedly criticized then-Treasury Secretary Janet Yellen for boosting the share of bills, which mature in up to a year, in US debt — something he argued held down longer-term yields and was done to boost the economy before the election. Yet Bessent retained the Yellen team’s plan for debt issuance earlier this month.
Asked about his past comments, Bessent said Thursday “the previous administration shortened some of the duration, and we haven’t shortened it further.”
“We’re still seeing, sort of, the Bidenflation that’s still coming through,” he said. “As the market starts to realize what we’re doing, and if inflation starts to drop, then we will see — so it’s going to be path dependent,” he said of stepping up longer-term debt sales. “That’s the eventual goal, but I’m not going to signal it now.”
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In a wide-ranging interview that touched on issues from China and Ukraine to Elon Musk’s energy level, Bessent reiterated his argument that, with cost savings from Musk’s DOGE efficiency drive, that should help bring down spending. Deregulation, tax cuts and an expansion in US energy supplies will ensure non-inflationary growth, and provide the basis for a drop in longer-term yields, he said.
Longer-dated US Treasuries rose after Bessent’s comments. Ten-year yields were down about 4 basis points, at 4.50% as of 10:06 a.m. in New York. Yields remain well above their pre-pandemic levels, when they languished below 2%.
Bessent noted the Fed is currently shrinking its own holdings of Treasuries — creating, in effect, a competing seller of debt to the market. Minutes of the latest Fed meeting showed policymakers discussed pausing or slowing the quantitative tightening program.
