U.S. Treasury Secretary Scott Bessent, a longtime ally of Federal Reserve Chairman Kevin Warsh, is attempting to influence the bond market to lower Treasury yields. The Treasury Department announced Wednesday it would buy back at least $2 billion in long-dated Treasuries. Warsh, whose positions on Fed independence remain ambiguous, has proposed updating the 1951 Treasury-Fed Accord and transferring more authority to the Treasury over adjustments to the central bank’s balance sheet, which stands at $6.7 trillion. His plans to reduce Fed holdings and shift toward short-term debt, however, cut against Bessent’s goals, as they would likely push up long-term yields. A Fed task force is expected to report on the balance sheet question by year-end or early 2026.
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