Treasury vs Fed: Yield Suppression Sparks Policy Coordination Concerns
US Treasury Secretary Basent's sudden intervention to expand long-term Treasury buybacks has put him directly at odds with Federal Reserve Chair Walsh, who is fighting inflation. The Treasury Department's actions are seen as an attempt to suppress rising yields, but Wall Street critics argue it's a self-imposed strategy that won't work.
The $4 billion weekly buyback program announced by Basent is unlikely to move the market, according to Peter Tchir of Academy Securities. The operation is 'not quantitative easing, but essentially just rearranging chairs on the deck' without actually creating money, he said.
Besides, Wall Street experts warn that this intervention may be seen as a signal of policy effectiveness, rather than actual market demand. Basent's actions are in direct conflict with Walsh's stance that rising yields reflect economic fundamentals requiring higher borrowing costs.