Treasury Secretary Scott Bessent said that any move to boost the share of longer-term Treasuries in government debt issuance is some ways off, given current hurdles that include elevated inflation and the Federal Reserve’s quantitative tightening program.
“That’s a long way off, and we’re going to see what the market wants,” Bessent said in an interview with Bloomberg Television’s Bloomberg Surveillance on Thursday, when asked about “terming out” sales of US Treasuries sales. “It’s going to be path dependent.”
Before he came into office, Bessent had repeatedly criticized then-Treasury Secretary Janet Yellen for boosting the share of bills, which mature in up to a year, in US debt — something he argued held down longer-term yields and was done to boost the economy before the election. Yet Bessent retained the Yellen team’s plan for debt issuance earlier this month.
Asked about his past comments, Bessent said Thursday that “the previous administration shortened some of the duration, and we haven’t shortened it further.”
“We’re still seeing, sort of, the Bidenflation that’s still coming through,” he said. “As the market starts to realize what we’re doing, and if inflation starts to drop, then we will see — so it’s going to be path dependent,” he said of stepping up longer-term debt sales. “That’s the eventual goal, but I’m not going to signal it now.”
Bessent reiterated his argument that, with cost savings from the DOGE efficiency drive, and faster growth fueled by deregulation and tax cuts rather than by government spending, and with an expansion in US energy supply, inflation will retreat. That would then provide the basis for a drop in longer-term yields, he said.
Longer-dated US Treasuries rose after Bessent’s comments, with 10-year yields falling about three basis points, to 4.50% as of 8:20 a.m. in New York. Yields remain well above their pre-pandemic levels, when they were well below 2%.
Bessent noted that the Fed is currently shrinking its own holdings of Treasuries, creating in effect a competing seller of debt to the market. Minutes of the latest Fed meeting showed that policymakers discussed pausing or slowing the quantitative tightening program.
“The Fed said that they may stop their balance sheet runoff,” Bessent said. It would be “easier for me to extend duration when I’m not competing with another big seller.” He also said that he met with Fed Chair Jerome Powell on Wednesday, and would continue his practice of not commenting publicly on current monetary policy.
In a wide-ranging interview that touched on issues from China and Ukraine to Elon Musk’s energy level, Bessent also dismissed speculation the government might revalue its holdings of gold in an effort to reduce US borrowing needs, or for the purpose of funding the creation of a sovereign wealth fund.
“When we were talking about the sovereign wealth fund, and I said, ‘monetize the balance sheet,’ I promise you, that’s not what I had in mind,” Bessent said of revaluing the gold. Pressed on whether it’s on the table, he repeated, “That’s not what I had in mind.”
The reserves are currently valued at $42.22 per ounce, a legacy official price from decades ago. Revaluing them based on current market prices could boost the calculation to roughly $750 billion from $11 billion.
The Treasury chief said he had no plans to visit Fort Knox, Tennessee — where much of the US gold reserve is kept — but he assured “all the gold is there” and any senator is welcome to visit to see it.
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