US Treasury Secretary Scott Bessent has proposed a plan to lower long-term yields by easing bank regulations. The goal is to allow banks to hold more US government debt and lend more freely.
The plan involves lowering the supplementary leverage ratio (SLR), which was established in 2014. The SLR ensures banks have sufficient capital to absorb losses during periods of stress. By reducing this requirement, banks may be able to increase their holdings of US government debt and take on more loans.
Bessent’s plan aims to make it easier for banks to access the US government bond market. This could lead to lower long-term yields as more money is channeled into the market. However, the effectiveness of this plan remains uncertain, and its impact on interest rates will depend on how it plays out in practice.
Source: https://www.marketwatch.com/story/treasury-secretary-bessent-has-a-plan-to-bring-down-long-term-yields-but-will-it-work-bbe73dfe