Billionaire investor Stanley Druckenmiller has sharply criticized Treasury Secretary Scott Bessent after the Treasury doubled long-term bond buybacks to $4 billion per operation. The move came after the 30-year Treasury yield touched its highest level since 2007, but the effect on yields quickly faded.
Druckenmiller, who mentored Bessent at Soros Fund Management in the early 1990s, argued in a Wall Street Journal op-ed that the Treasury crossed a line from liquidity management into price management. "Governments defending prices against fundamentals always lose," he wrote. "The only variable is how much they spend before conceding."
The expanded program raises liquidity-support purchases for 10- to 30-year securities from a $2 billion maximum to at least $4 billion per operation beginning Sept. 9. Despite the brief decline in yields after the announcement, the 30-year Treasury yield stood at 5.212% and the 10-year at 4.681% as of Tuesday, only slightly below recent peaks.
Druckenmiller said the real issue is fiscal discipline. With U.S. debt above $40 trillion and an expected annual deficit near $2 trillion, about 6% of GDP, he warned that artificial yield suppression is "a subsidy to procrastination" and that only credible deficit reduction will durably lower long-term borrowing costs.
The policy also complicates the position of Federal Reserve Chair Kevin Warsh, who wants markets to set the cost of capital. Analysts including Peter Boockvar and Krishan Guha noted that Treasury intervention distorts market signals, while Warsh’s credibility faces additional pressure ahead of the Jackson Hole meeting. Lower yields initially supported equities, while Bitcoin and gold benefited from a weaker dollar before macro uncertainty returned.
