The US bond market is undergoing a significant shift as Treasury Secretary Scott Bessent pushes to lower the 10-year Treasury yield. This new approach has led to the emergence of two terms: the “Powell Put” and the “Bessent Put.” The former refers to expectations that Fed Chair Jerome Powell might pivot monetary policy in response to economic downturns or stock market declines.
In contrast, Bessent’s commitment to using fiscal tools to suppress benchmark interest rates is signified by the latter. This represents a notable shift in tone and strategy for the Treasury Department, as it traditionally influences yields through bond issuance and debt management.
Bessent maintains that both he and President Trump are focused on using fiscal measures, such as cutting government spending, to sustain lower long-term interest rates. Institutions like Société Générale, Barclays, and RBC Capital Markets have already lowered their 2025 forecasts for the 10-year Treasury yield, citing Bessent’s fiscal approach as a key factor.
The 10-year Treasury yield has fallen over 50 basis points from its January peak of 4.80%, currently trading at 4.273%. This trend is seen as a result of Bessent’s efforts to “naturally decline” the yield as Trump administration policies take effect.
Source: https://www.mitrade.com/insights/news/live-news/article-0-714893-20250324