U.S. Bond Market Performance Under Trump

During a recent event hosted by Breitbart News, Treasury Secretary Scott Bessent described the U.S. bond market under President Donald Trump as the “best performing in the world,” with inflation expectations remaining “flat to down.”

In a conversation with Breitbart News Finance and Economics Editor John Carney, Bessent, who is referred to as the “chief bond salesman of the United States,” was asked about the rationale behind bond repurchases.

Carney remarked that some people misunderstood the situation, thinking Bessent was attempting to interfere with the Federal Reserve’s actions. He noted their recent appearance together at the G20, suggesting there was no conflict between them, and asked for clarification on the repurchase strategy.

Bessent responded by explaining that older bonds, as they age, become “off the run,” leading to reduced liquidity and lower margins for bondholders. Consequently, these bondholders might be less willing to retain these bonds due to wider spreads. To address this, the Treasury steps in to create a market for these older bonds.

“We’re buying those older bonds, and then they re-leverage and purchase new ones,” he described, calling it a “regenerative process.”

He also mentioned that another aim of the repurchases was to manage rising speculation in the market. He pointed out that when there’s a buzz in financial circles, there’s often a rush to make quick profits. However, he remarked critically on the financial press, saying they tend to latch onto narratives and often lose sight of the facts. “Let’s take a time out. I don’t believe what they say about QE,” he stated. He further expressed skepticism about being able to bring the market back to what might be called an equilibrium price, even noting that nothing is truly in equilibrium.

Bessent elaborated that when there’s a market imbalance, his role is to guide things back towards stability. “You’re either moving toward equilibrium or away from it,” he explained, asserting that since Trump took office, the U.S. bond market has outperformed globally.

On the topic of inflation expectations, he pointed out that they have remained flat to down for the next five years. Bessent countered any notions of widespread concern over U.S. credit by stating that if investors were truly worried, they would be opting for German bonds instead of U.S. bonds, which isn’t the case. “We’re the best performing,” he concluded.

WATCH: “State of the Economy” — A Discussion with Treasury Secretary Scott Bessent: