What Bessent is now saying after bond yields didn't stop rising on 'I am the house' remark

By Jules Rimmer

Bessent insists he 'trusts the process' and in bond markets 'you win over time'

U.S. Treasury Secretary Scott Bessent now admits that the house doesn't always win.

Treasury Secretary Scott Bessent is projecting a more humble view after failing to jawbone the bond market.

In an interview last month, Bessent told investors, "I am the house now," and warned bond-market bears to bet against him if they wanted.

They did, and now he sounds more conciliatory. In his latest interview with Axios Sunday, Bessent backtracked and conceded, "I can't control the bond market."

In between those two statements U.S. government bonds sold off sharply with 10-year yields BX:TMUBMUSD10Y jumping almost 50 basis points, leading Rich Privorotsky, the head of Delta One Trading at Goldman Sachs to describe the Treasury market as "totally bidless." Yields move in the opposite direction to prices.

Defending his remarks, Bessent told Axios co-founder Mike Allen that it was oil prices that were responsible for the selloff, that the house doesn't win every hand and "the house plays the percentages. You win over time."

Bessent argued that since President Donald Trump returned to office in January 2025 the U.S. has been the world's best-performing bond market, although total returns for both China BX:AMBMKRM-10Y and Switzerland 10-year bonds have been materially better.

Challenged by Allen that the bond markets had "slapped back", Bessent flatly contradicted him: "No, it didn't." The background for this exchange was the August decision Bessent had announced the Treasury department's intention to increase the size of its bond-buyback program to contain rising yields. Asked if this was a sign of increasing activism and intervention in the markets, Bessent countered this wasn't the case: "We are not an activist Treasury."

He then went on to promote the merits of the U.S operation in the summer of 2025 to defend the Argentinian peso (USDARS) which had resulted in successful election results for Javier Milei, leading to a sea-change in Latin American politics in favor of stronger relations with the U.S.

The interview ranged across other subjects, most notably inflation and AI. Bessent defended the administration's record on inflation, pointing out that grocery inflation is only 2.2% and the spike in energy and fuel prices is "headline inflation" and transient.

Bessent pushed back against what he called "AI doomerism" and predicted that it would increase productivity, and one of the reasons why interest rates were heading higher was because of the robust demand for capital from hyperscalers expecting to benefit from the revolutionary new technology.

Moreover, Bessent countered questions about the government's economic record by citing substantial wage growth and also healthy consumer spending.

In early trade Monday, U.S. 10-year bonds were trading largely unchanged from Friday at around 5.27% yield.

-Jules Rimmer

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10-05-26 0640ET