Bloomberg says Treasury is signaling its intent to resist further increases in long-term Treasury yields

Treasury Secretary Scott Bessent and the U.S. Treasury Department are signaling to markets that they want to prevent further increases in long-term Treasury yields, Bloomberg reported.

Bloomberg said on August 9 that the view is gaining traction among Wall Street traders and market strategists. They interpret several recent developments through that lens, including joint intervention by U.S. and Japanese currency authorities to support the yen, a change in the Treasury's language on long-term debt issuance plans, and Bessent's public backing of Federal Reserve Chair Kevin Warsh.

Bloomberg said the U.S.-Japan intervention to support the yen was intended to reduce the risk that Japan might sell large amounts of U.S. Treasuries to raise the dollars needed to defend its currency. Such sales would push bond prices down and yields higher.

Bessent has also asked for an expansion of the Federal Reserve's Foreign and International Monetary Authorities Repo Facility so Japan's currency authorities can secure dollar liquidity without selling U.S. government bonds.

A change in the Treasury's debt issuance statement also drew market attention. In a statement last week, the department replaced its earlier reference to a "potential future increase" with "potential future changes." Bond investors took that as a signal that issuance of long-term Treasuries could be reduced.

Yields on long-dated U.S. government debt have surged recently. The 30-year Treasury yield rose to 5.28% on July 31, the highest level since July 2007 and a 19-year high. Higher long-term yields can drive up mortgage rates and increase the burden on households. That also creates a political headache for President Donald Trump and Republicans ahead of the November midterm elections.

After Warsh declined to present a clear policy direction at a press conference following the Federal Open Market Committee meeting on July 29, long-term Treasury yields jumped. Bessent then offered public support, telling CNBC that markets needed help "decoding" the Fed's policy remarks.

Some investors say the Treasury's measures may have only a limited effect on the market. Phoebe White, head of U.S. rates strategy at UBS, said the recent steps may have limited impact. Still, she added, they show that "the Treasury will use every tool available to prevent a further rise in long-term Treasury yields."

Lee Song-ryeol, Hankyung.com reporter yisr0203@hankyung.com