The time Scott Bessent tried to outsmart the bond market

Scott Bessent joined the Trump administration last year armed with formidable experience in markets, the widespread respect of Wall Street and limitless confidence.

Bessent has brought to his role as Treasury secretary and President Donald Trump's point man on the economy the same swagger that famously allowed him to help George Soros "break" the Bank of England in 1992 by betting bet heavily against the pound. The trade forced the UK to abandon its efforts to prop up the currency – and netted Soros more than a billion dollars.

Bessent has recently dared traders to cross him by boldly declaring, "I am the house now." He's dismissed criticism by saying if "some of the Bloomberg Terminal bros are unhappy with what I'm doing, well, that's too bad." And he's promised to ease the cost of money by driving down bond yields.

But his efforts to outsmart the bond market – the deepest and most important market on the planet – have not lived up to the hype. If anything, critics say his efforts have backfired.

"The data is clear. He's added accelerant to the fire. He's had the exact opposite impact that he wanted," said Tim Mahedy, CEO of Access/Macro and a former official at the Federal Reserve Bank of San Francisco and the International Monetary Fund.

Early last year, Bessent said he wanted to lower the all-important 10-year yield below 4%. Instead, the opposite has happened, with the benchmark rate briefly climbing above 5.04% on Tuesday for the first time since 2007.

With rates rising uncomfortably high last month, Bessent surprised many on Wall Street with a controversial intervention that ultimately tripled Treasury buybacks.

But the plan has not been effective. Bond yields are higher now than before Bessent intervened, an increase that will make it more expensive for consumers to get a mortgage, mom-and-pop shops to get a small business loan and for Washington to borrow.

"It massively flopped," Hardika Singh, economic strategist at Fundstrat, an investment research firm, told CNN earlier this month. "If anything, this may have made the problem worse. Bessent showed his hand. To investors, it was like, 'Oh my gosh, he's worried.' We should be too."

The Bessent move drew criticism from his mentor, legendary investor Stanley Druckenmiller, who penned an ( AI-assisted ) op-ed in The Wall Street Journal warning that efforts to suppress yields would backfire.

Douglas Holtz-Eakin, a top economist under President George W. Bush, said Bessent's move to control yields was "doomed to fail" because it didn't address the elephant in the room: Trillion-dollar deficits as far as the eye can see.