Treasuries Gain With Bessent and Warsh Due to Set Direction

Treasuries Gain With Bessent and Warsh Due to Set Direction

Mon, August 24, 2026 at 12:22 PM GMT+3 3 min read

(Bloomberg) -- Treasuries gained at the start of a potentially pivotal week for the US bond market, with remarks from US Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh likely to determine where yields go next.

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Yields were lower across maturities on Monday after a choppy week when US 30-year borrowing costs touched a near two-decade high before the US Treasury stepped in boosting buybacks. The 10-year yield was three basis points lower at 4.71%, while the 30-year fell by a similar margin to 5.24%.

The key question for investors is what the Treasury Secretary will do next. Having surprised the market last week with a plan to increase buybacks of longer-dated notes, bondholders now want specific details on a "financial initiative" touted by Bessent as a way of tackling the country's vast budget deficit.

Warsh too is in investors' crosshairs, with his keynote speech at the Kansas City Fed's annual Jackson Hole symposium due Friday. He will be under pressure to address how the Fed will navigate tackling inflation running well above target with Bessent's intervention to bring down long-term borrowing costs.

"Markets will spend the week anticipating Kevin Warsh's first Jackson Hole speech as Fed Chairman," said Geoff Yu, a senior market strategist at BNY. "With long-end bonds still febrile, investors want to know how the Fed will respond to the Treasury's actions."

July PCE on Wednesday also "raises the stakes," Yu added. Economists surveyed by Bloomberg expect the year-on-year figure to slow slightly to 3.6%, from 3.7% the previous month. The core figure is expected to remain steady at 3.3%.

Warsh himself has provided little forward guidance since taking the post in May. His appearance after the last policy meeting sparked a massive selloff, underscoring the market sensitivity surrounding Friday's remarks.

While yields edged lower Monday, they remain around levels where the US Treasury intervened last week — a signal that it's uncomfortable with the current borrowing costs. One of Bessent's key objectives when he was appointed by Donald Trump was to bring yields down as the US grapples with interest costs well in excess of $1 trillion a year.

Pacific Investment Management Co. is looking to buy bonds if yields continue to rise, according to a report from Marc Seidner, chief investment officer of non-traditional strategies, and Pramol Dhawan, head of emerging markets portfolio management.

"From our perspective, current yield levels look increasingly appealing by historical standards, offering a compelling entry point for long-term investors," they said. "We continue to view bonds as attractive."

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