Heres how us treasury secretary bessent could attempt to target 4 for the 10yr yield

Key arguments

• Most of the rise in long-dated rates reflects printed inflation, reactive hikes and higher real rates, not a US fiscal selling tantrum.
• Treasury buybacks and reduced long-end issuance can narrow swap spreads; the recent increase in buybacks has already tightened long-tenor spreads.
• The current 10yr SOFR rate of 4.8% is about 50bp too high because the market's aggressive Fed hike discount is overstated.
• Extreme action could bring the 10yr yield to 4%, but ING does not advise it and sees no need now as swap spreads are not out of control.

Corresponding source evidence

1. If we did, and it was severe, the US Treasury could feel forced to take more extreme action.
2. We examine how that might look US Treasury Secretary Bessent has options to lower the yield on 10yr Treasuries, including bigger buybacks and cancelling long-end auctions A quick snapshot of what's to come Here we examine a scenario where the US Treasury chooses to take material action on the back end of the curve, targeting lower yields.
3. That said, if the US Treasury were to choose to take action, say through bigger buybacks and/or cancelled 20yr auctions, this should be expected to do no more than richen Treasuries versus swaps.