Over the past three weeks, Bessent has emphasized at least four times that he possesses "asymmetric information," even challenging yen shorts to "short me if you have the guts." Yet, as oil prices break above $100 and long-term U.S. Treasury yields continue to rise, the market is now testing his hand through actual price movements.
Bessenet repeatedly sends the same message to investors: don't easily take a stance against the U.S. government.
The logic emphasized by this former hedge fund trader is that he had access to government policy information that market participants did not possess. In his view, investors who bet against government objectives—whether in oil prices, the yen, or U.S. Treasury yields—risk incurring losses.
Over the past three weeks, Bessent has publicly mentioned this “asymmetric information” at least four times, including once on Tuesday, when he directly challenged yen traders: “If you’ve got the guts, short me.”
But at least based on the performance of the bond and oil markets, traders have not backed down.
Benchmark oil prices have surpassed $100 per barrel, further pushing up gasoline prices at gas stations. Meanwhile, Bassent attempted to lower the 10-year U.S. Treasury yield by increasing bond repurchases through the Treasury for the first time, but on Wednesday, the yield rose instead, continuing the selling trend from the past two weeks and reaching a three-year high of 4.85%.
The market is testing Bensent's "bottom line."
The movements of bonds and oil are important because both directly affect the economic pressures faced by American voters ahead of the crucial midterm elections.
More challenging is the fact that the key forces driving these two markets are not entirely under the Treasury Secretary’s control. Over the past six months, the U.S. budget deficit and energy shocks from the war in Iran have exerted upward pressure on U.S. bond yields.
Mark Spindel, founder and chief investment officer of Potomac River Capital, believes the market has begun to recognize the limitations behind Bessent’s statements.
“The market has seen through his bluster,” Spindler said. He noted that the massive federal deficit and investors’ concerns about whether the Federal Reserve can contain inflation are overshadowing Bessent’s attempts to influence the market.
Spindler said, "I believe that despite Bessent's strong rhetoric, these factors are putting more pressure on the market."
Governments have previously influenced financial markets through verbal statements. In the 1980s, the Plaza Accord led to a depreciation of the U.S. dollar against other currencies; after the global financial crisis, European authorities' efforts to stabilize the euro initially struggled, but succeeded after the European Central Bank president pledged in 2012 to do "whatever it takes."
Japan also successfully implemented yield curve control for many years. However, these actions were typically backed by a central bank, which possesses nearly unlimited policy tools to steer the market in the direction policymakers desire.
Bensent had clearly limited tools at his disposal. He was confronting a U.S. budget deficit of nearly $2 trillion under the Trump administration, along with energy shocks caused by the war in Iran—both of which continued to impact the U.S. bond market.
Bessent emphasized that he is not focused on short-term market prices. He explained that his goal is to "slow things down" and ensure traders "focus on fundamentals."
The Treasury spokesperson did not respond to requests for comment. White House spokesperson Kush Desai said that Bessent has demonstrated skillful handling of financial markets, noting his successful stabilization of the Argentine peso last year.
DeSantis said: "Secretary Bentsen is not only the conductor of the financial markets but also one of the most transformative Secretaries of the Treasury in modern history."
He also said, "Secretary Betancourt has consistently leveraged and strengthened his prestige and the power of the U.S. economy to serve President Trump and the American people."
Even after increased buybacks, the long-term bond market continues to move in the opposite direction.
Bessent unexpectedly announced last month an expansion of the Treasury bond repurchase program, surprising the market.
Subsequently, in an interview with CNBC, he stated that current yield levels "do not reflect underlying fundamentals." Bessent also said the government would soon roll out a fiscal plan, though this plan has yet to materialize; he also discussed the potential to "save hundreds of billions of dollars" by cracking down on fraud.
This idea is similar to a proposal briefly put forward by Elon Musk’s cost-cutting team in early 2025, though the latter was ultimately not implemented.
Michael Strain, Director of Economic Policy Studies at the American Enterprise Institute, believes that Bessent has repeatedly attempted to influence long-term yields, but with limited success.
“According to my calculations, he has attempted three times to move the long end of the yield curve in his favor, but failed each time,” Strain said. “He has lost credibility.”
However, Bessent's policy influence was not entirely without effect.
After the United States and Japan jointly supported the yen, the yen has clearly rebounded—at least for now. This action may also prevent the Japanese government from selling U.S. Treasury bonds to raise dollars and intervene in the yen’s exchange rate on its own.
Bessent entered the Argentine market last year and also helped avoid a financial crisis.
For U.S. Treasuries, the Treasury still has room for further action, including continuing to expand bond buybacks or reducing long-term debt issuance to try to prevent yields from rising further.
Bank of America strategists Ralph Axel and Katie Craig believe that expanding repurchase agreements is "likely the beginning of a broader U.S. policy" aimed at capping long-term yields.
Some market participants further believe that Bessent may intensify efforts to prevent the 30-year U.S. Treasury yield from surpassing 5.3%, viewing this level as a "red line." Later Wednesday, the 30-year yield stood at 5.29%.
Citigroup strategists, including Jason Williams, said: "The Treasury's put option should be taken seriously."
Bessent knows better than anyone what it means to intervene in the market.
Bessent's heightened focus on the impact of market interventions is also tied to his personal experiences.
More than thirty years ago, he rose to fame for helping George Soros bet against the Bank of England’s failed effort to defend the pound.
At the beginning of last year, Bessenet stated that the U.S. bond market would ultimately serve as a key indicator of whether his policies were successful. He believed at the time that if the government brought budget deficits under control and entered a phase of low-inflation growth, the 10-year U.S. Treasury yield would decline.
The yield did decline later, but after Trump launched a war against Iran in late February, the market reversed course, and yields surged again.
By July, the market began to question the credibility of Federal Reserve Chairman Kevin Warsh in combating inflation, further intensifying the sell-off of U.S. Treasuries.
Meanwhile, Bessent was pushed onto another policy front: using economic sanctions to accelerate the end of the war in Iran.
He labeled this initiative an action against "economic outcasts," threatening global banks and other entities with sanctions if they continue to maintain business relations with the Islamic Republic of Iran.
Bessent even compared these sanctions to the D-Day invasion that helped end World War II.
Before launching this program, when discussing oil prices, he said the market had "misunderstood" what was about to happen and reiterated: "Once again, we have asymmetric information."
However, since then, the United States has not taken significant action against Iran's major trading partners, and oil prices have continued to rise.
Stephen Myrow, Managing Partner at Beacon Policy Advisors and a former Treasury official in the George W. Bush administration, believes that Bessent’s recent remarks resemble Trump’s communication style. Trump previously made multiple claims that victory over Iran was imminent, yet the conflict continues.
Miero believes that if the market continues to move against Bensent, the risks will also increase.
“This isn’t what the market wants,” Miro said. “The market doesn’t want someone seen as weak, but it also doesn’t want someone who is dramatic or overly emotional.”
Nathan Thooft, Chief Investment Officer of the Multi-Asset Solutions team at Manulife Investment Management, believes that Bessent still possesses sufficient credibility, policy tools, and market influence.
Tufte said these factors are enough to make investors "think twice" before building crowded short positions.
But he also cautioned: "The market ultimately tends to test policymakers, and his firepower is not unlimited."