Bessent Is Trying to Push Bond Yields Lower. His Former Mentor Says It Won’t Work.

Treasury Secretary Scott Bessent's attempt to rein in long-term U.S. borrowing costs is facing a growing backlash on Wall Street, including from one of the investors who helped shape the early days of his career.

Billionaire investor Stanley Druckenmiller, founder of Duquesne Family Office and Bessent's former investing mentor, has emerged as one of the most prominent critics of the Treasury's expanding intervention in the bond market.

In a Wall Street Journal opinion column titled "Let the Bond Market Speak," Druckenmiller argues that trying to suppress yields through government bond purchases will not solve the United States' deteriorating fiscal position that is driving borrowing costs higher.

The piece was published after the Treasury moved to expand its purchases of longer-dated government debt. Bessent initially announced plans to double the department's usual $2 billion buybacks of older, or "off-the-run," Treasury securities. Officials have also indicated that the program could become substantially larger.

Treasury sources told CNBC that the government could potentially tap its roughly $935 billion Treasury General Account to finance additional purchases. The account functions as the federal government's primary operating cash balance.

The interventions have had some effect. Longer-term Treasury yields have retreated from recent peaks that reached levels not seen since before the 2008 global financial crisis. But critics argue the relief could prove temporary, particularly as Washington continues issuing enormous amounts of debt.

About $4.8 trillion in U.S. government debt was issued in 2025, and this year could surpass that amount. Meanwhile, total federal debt recently crossed $40 trillion, and the 2026 budget deficit is on track to exceed $2 trillion.

Druckenmiller said those fundamentals, rather than a malfunctioning bond market, explain why investors are demanding higher yields. "If the 30-year must trade at 5.5% to clear, that isn't a crisis. It is an invoice," Druckenmiller wrote.

"Then do the only thing that durably lowers long-term yields: address the primary deficit." Druckenmiller's criticism carries additional weight because of his history with Bessent. Both men worked with George Soros and participated in the famous early-1990s trade against the British pound.

Now Druckenmiller is warning his former colleague that Treasury risks damaging its credibility if investors conclude the government is attempting to establish an unofficial ceiling on yields. "Every basis point of artificial yield suppression is a subsidy to procrastination," Druckenmiller wrote. Once investors believe Treasury is defending a particular bond price, he argued, each increase in yields becomes a test of how much money officials are prepared to spend.

"Governments defending prices against fundamentals always lose," he added.

Other strategists share his skepticism. Ryan Swift, chief strategist at BCA, argued that Treasury lacks the financial power necessary to permanently suppress yields.

Unlike the Federal Reserve, Treasury operates with a finite amount of cash. The Fed can create reserves to finance asset purchases, as it did through quantitative easing and programs such as Operation Twist.

"If the U.S. government is serious about yield suppression, the Federal Reserve must be involved," Swift wrote in a client note seen by CNBC. Without the Fed's balance sheet, he said, Treasury's efforts could fail or even backfire if investors interpret them as evidence that officials are becoming desperate.

That would put Fed Chair Kevin Warsh in an uncomfortable position. Warsh has emphasized market price discovery since taking control of the central bank, saying after the Fed's July meeting that investors were learning to "play the ball, not the referee."

Some analysts also question whether current yields are abnormal enough to justify intervention. The 30-year Treasury yield is only modestly above its roughly 5.16% 50-year average, while the benchmark 10-year yield was trading Tuesday around its long-term historical average of 4.64%.

"The bond market's message is straightforward: fiscal or monetary policy should be tighter," Nohshad Shah, head of fixed income sales for Europe, the Middle East and Africa at Citadel Securities, wrote.

Attention now turns to Warsh, who is scheduled to speak Friday at the Federal Reserve's Jackson Hole symposium. The Fed meets again Sept. 15-16, with markets pricing roughly a 40% probability of a rate increase.