Bessent's Market Magic Fails: Treasury Secretary Can't Keep Lids on Yields

US Treasury Secretary Scott Bessent's recent attempts to influence global capital markets have not yielded the desired results. His efforts to keep a lid on long-term Treasury yields and stabilize the Yen have been met with skepticism by bond and FX trading desks.

Bessent, who has a reputation as a skilled trader, was expected to bring market savvy to the Trump administration's economic team. However, his past association with George Soros, whom he worked with in 1992 on a bet against the British pound, raised eyebrows among some critics.

The market appears to have seen through Bessent's attempts at intervention, treating them as good entry points to continue selling Yen and Treasuries. The Treasury's use of $5-10 billion from the Exchange Stabilization Fund (ESF) to buy Yen was seen as a waste of capital, with the market absorbing it before going back to its previous trend.

Bessent's track record, including his hedge fund Key Square Group, which lost money in five of seven years and closed when assets fell to $500 million, has raised questions about his ability to generate alpha. His recent claim that long-term Treasury yields don't reflect the underlying fundamentals is seen as dubious given his past performance.