Bond markets reject buybacks; Iran sanctions stop short of China
Treasury Secretary Scott Bessent is facing criticism from political operatives, financial analysts, and policy observers as he attempts to manage a $40 trillion national debt, navigate a tariff-driven trade dispute with Canada, and execute President Donald Trump’s Iran sanctions campaign, according to a Guardian profile published Saturday.
The criticism comes as the Treasury faces long-term yields at heights not seen in nearly two decades, an Iran strategy that has shifted from a six-month bombing campaign to economic isolation, and a tariff dispute with Canada, according to the Guardian. Enforcing secondary sanctions fully against Iran would require the Treasury to target major Chinese state-owned banks — a step Bessent has so far avoided because it could trigger a broader trade war with China.
Bessent last week announced that the Treasury would double the size of its quarterly buybacks of longer-dated bonds, boosting repurchases of 10-to-30-year securities to at least $4 billion per operation. Bessent said the move aimed to support liquidity in a thinly traded August market. The intervention briefly pushed long-term yields lower before they retraced nearly all of those losses by week’s end, the Guardian and the Financial Times reported. Analysts have assumed the buybacks are being funded from the Treasury General Account at the Federal Reserve, according to the Guardian.
Charlie McElligott, a cross-asset strategist at Nomura, called the move a “band-aid on a bullet hole” and said it would “not be enough to placate market forces,” according to the Financial Times. Bill Galston, a senior fellow at the Brookings Institution, told the Guardian that “the long bond buyback was perceived as somewhat farcical by the financial community,” and that “when he went on to opine that we could grow our way out of the debt, I’m sure he knows better than that.” Galston added that “Wall Street, like Queen Victoria, is not amused.” Earlier in August, Bessent carried out the first joint intervention in the Japanese yen in 15 years to support currency stability, the Guardian reported.
On Iran, Bessent at a Monday press conference invoked “economic asphyxiation” of Tehran but stopped short of imposing immediate secondary sanctions on Iran’s major trading partners, according to the Guardian. Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota, told the Guardian that the announcement was “mostly rhetorical, not breaking any major new ground. At its core, what Bessent announced is an attempt to create an out for Donald Trump from the war he created and the mess that has resulted.” Asked at the press conference about the trade-off with China, Bessent said: “Why would I want to blow up the global financial system?”
The profile traces Bessent’s career: born in South Carolina, a 1984 Yale graduate, and a former protégé of liberal philanthropist George Soros — Bessent played a role in Soros’s 1992 wager against the British pound. Bessent donated to Democratic causes including Al Gore’s presidential run before shifting toward the Republican fold, eventually emerging as an adviser and intellectual defender of Trump’s economic nationalism. The Senate confirmed him as treasury secretary in 2025 by a 68–29 vote, with some Democrats and independents in favor, making him the first openly gay US treasury secretary.
On tariffs, Bessent wrote an investor letter in 2024 arguing that tariffs were inflationary. By last year, he was telling audiences: “I’ve evolved on this. The president has been right.” He has also described tariffs as “a useful tool for achieving the president’s foreign policy objectives,” claiming that founding treasury secretary Alexander Hamilton was their original proponent.
Over the weekend, Trump announced 50 percent tariffs on $20 billion worth of Canadian goods, after bilateral talks broke down. Canada retaliated by imposing tariffs on an equivalent value of US goods including steel, dairy products, appliances, and farm equipment.
Other critics quoted by the Guardian were sharply critical of Bessent’s tenure. Steve Schmidt, a former political strategist for President George W Bush and the John McCain presidential campaign, said: “He is, bar none, the worst treasury secretary in the history of the United States. Because the first treasury secretary was a true genius, the distance between Alexander Hamilton and Bessent in evolutionary scale is the difference between a flea and a human being. He is inept, he is incompetent, he is dishonest, he is smug, he is craven.”
Jacobs told the Guardian that Bessent “is in the unenviable position of trying to make Trump’s whimsical preferences become reality and is repeatedly failing or making the situation worse.” Kurt Bardella, a political commentator and former congressional aide, said Bessent “has zero credibility on the global stage and appears in over his head,” adding that “on interest rates, the national debt, inflation, tariffs, he has mismanaged expectation and appears to be more preoccupied with being a yes-man to Trump than actually protecting the full faith and credit of the United States. At this point, the United States would be better off with an AI-bot running the treasury department than this blowhard.”
Earlier MSI coverage tracked Bessent’s August 25 announcement of “Operation Economic Outcast” on Iran, reported alongside an oil tanker strike off Oman’s coast, and the same day’s Wall Street Journal column by Stanley Druckenmiller — Bessent’s former colleague at Soros’s fund — warning that the Treasury’s expanded bond buyback program was “price management” rather than “liquidity management” and would not durably lower yields (Druckenmiller tells Bessent to cut deficit instead of intervening in bond market).