Scott Bessent promised bigger purchases of America's own debt on Friday, hours after the rally he bought two days earlier died in front of him.
Bessent is doing something the government almost never does. The Treasury sells bonds — loans from investors, repaid with interest — to cover what Washington spends. This week Bessent started buying some of them back, with cash, to push that interest rate down. On Wednesday his department promised to increase, "by at least double," its purchases of the government's long-term loans. Two billion dollars became at least four billion. Rates fell. By Friday investors had pushed them back to where they started.
On Monday and Tuesday the interest rate on the government's thirty-year loans hit 5.31%, then 5.34% — the highest since 2007. A $25 billion sale of thirty-year debt cleared at 5.216%, the worst result since 2001. On Tuesday the federal debt passed $40.05 trillion, according to Treasury figures reported by CBS. More than double its 2017 level. Interest on the debt alone approached $1 trillion last year, about fourteen cents of every dollar Washington spent.
Every rescue like this has come from the Federal Reserve, the central bank that sets interest rates. It is not coming.
