Trump Threatens Military Intervention as Treasury Yields Hit Decade Highs
President Donald Trump suggested military force as an intervention tool while Treasury Secretary Scott Bessent struggled to stabilize bond markets amid $40 trillion in national debt.
U.S. Treasury bond yields surged to multi-year highs this week, with 30-year yields hitting 5.34%, the highest level since 2007. The volatility follows the revelation that U.S. national debt has exceeded $40 trillion, compounded by persistent inflation and uncertainty over Federal Reserve Chairman Kevin Warsh's interest rate strategy.
Donald Trump responded to the market turbulence on Friday by stating that the U.S. military represents the "ultimate intervention." This comment followed a period of instability where Treasury Secretary Scott Bessent attempted to stabilize the market by doubling buybacks of long-term debt, increasing the maximum purchase from $2 billion to $4 billion. While the buyback caused a brief rally on Wednesday, yields snapped back by Friday, with the 10-year note settling around 4.74%.
President Trump later distanced himself from the buyback program, stating he did not direct the intervention. Meanwhile, Secretary Bessent announced an upcoming focus on fiscal consolidation to address a federal budget deficit currently running at approximately 6% of GDP. Bessent attributed some deficit growth to tariff refunds necessitated by a Supreme Court of the United States ruling.
Market anxiety is further fueled by a six-month conflict with Iran, for which Trump declared "economic D-day." While the administration has prioritized economic measures, reports indicate discussions regarding a nuclear strike. In response to the fiscal and geopolitical turmoil, investors shifted assets into gold and cryptocurrencies, with bitcoin surging 22% over the week.
