Democratic Senator Elizabeth Warren issued a series of questions to Treasury Secretary Scott Bessent on what she dubbed “unprecedented and chaotic” interventions in the US Treasuries market.
Warren, who is the ranking member on the Senate Banking Committee, asked in a letter to Bessent dated Oct. 7 whether the Treasury Department plans to shrink its cash pile to fund the buybacks. She also quizzed Bessent on what other steps the Treasury is taking to bring down yields on longer-term government securities. She asked for a response by Oct. 21.
Bessent surprised market participants with the expansion of the buyback program , announced Aug. 19 just two weeks after the Treasury had unveiled its latest quarterly debt-management plan. Warren said the administration’s maneuvers are undermining the Treasury’s longstanding strategy of being “ regular and predictable ” in its issuance strategy.
The Treasury chief took the action after longer-term borrowing costs hit the highest level since the early 2000s — spurred in large part by inflation pressures caused by the Iran war. Benchmark 10-year yields have climbed further despite the expanded buyback operations, hitting the highest since 2002 this week.
“The surge in Treasury yields is self-inflicted,” Warren wrote, referencing the US’s war with Iran. “Rather than advise the president to lower costs, you have chosen to launch unprecedented and chaotic interventions in the market, apparently in hopes of stemming the damage.”
Bessent has said that the administration’s efforts to isolate Iran economically will end threats posed by that regime, and that once the conflict is over energy prices will slide. That in turn will pull borrowing costs back down, he argues. He has also said that faster economic growth and a fiscal-consolidation plan he’s working on will help shrink the government’s borrowing burden .
Warren asked Bessent what analysis the Treasury has done on the impact of higher yields on broader consumer-facing borrowing rates such as car and home loans. She also pressed whether the department will be draw down the Treasury General Account to expand buybacks.
The department hasn’t specified whether it’s prepared to shrink its cash pile on a consistent basis. Market participants had initially assumed officials would ramp up sales of bills — which mature in up to a year — to pay for the purchases of longer-dated securities.
Read more: Bessent Stops Short of New Bond Measures Amid Report on Cash Use