US Treasury Bessent said he is working to restore balance in thinly traded markets and urged investors to focus on economic fundamentals rather than headlines. Treasury Secretary Scott Bessent also said liquidity in the 30 year Treasury market is particularly poor and warned against headline driven trading in illiquid markets.
Bessent said Treasury yields do not currently reflect fundamentals and indicated that the size of a planned Treasury buyback could exceed the previously announced $4 billion level. He said the buybacks are aimed at a thinly traded part of the market and that the Treasury would monitor developments to determine whether further action is required.
Bessent outlines fiscal and growth priorities
Bessent said the US fiscal deficit has very likely already peaked, while the recent widening was temporary and linked to tariff refunds. He expects 2026 tariff receipts to be similar to those in 2025 and said the administration will announce further fiscal measures in the coming weeks and months.
He also said firms are competing for capital and that corporate investment can support productivity growth. According to Bessent, underlying economic fundamentals remain very strong, while he described a lack of growth as the greatest threat to financial stability. He said the US can reduce its debt burden through economic growth.
On the dollar, Bessent said it has remained stable and reiterated that the Treasury will continue pursuing a strong dollar policy. He also said the dollar had briefly returned to levels seen two months earlier.
Bessent said the US supports Europe but wants it to follow recommendations from the Draghi report. He also said he hopes the G20 will return to its core mission, with the US message that stronger global growth can help address debt.
Iran sanctions and Treasury-Federal Reserve coordination
On Iran, Bessent said the US controls the Strait of Hormuz and said Washington will pursue coordinated economic isolation measures. He warned that countries continuing to do business with Iran could face US action and said the administration would impose what he described as the harshest sanctions in history. He also said the energy driven inflation shock is transitory and that maximum economic pressure could mean military action does not resume.
Bessent said Treasury and the Federal Reserve will coordinate on any changes to the balance sheet, while interest rate decisions are unrelated to Treasury buyback choices. He is scheduled to hold a press conference on Monday to discuss actions related to Iran economic sanctions.
