11AM Hour: Exclusive Interviews with Treasury Secretary Scott Bessent & St. Louis Fed President Alberto Musalem 8/20/26

**SPEAKER_1** (0:00)
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com or find Schwab Market Update wherever you get your podcasts.

**SPEAKER_2** (0:29)
When you partner with CDW, you get more from your devices with solutions that take modern work to the next level. CDW experts are delivering powerful productivity with Lenovo AI PCs, helping users block out distractions, access virtual support anytime, anywhere, and share content seamlessly between devices. Make amazing happen. Learn more at cdw.com/lenovo.
Good morning again. Welcome back to Squawk on the Street.

**Sara Eisen** (1:06)
I'm Sara Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. Today, Treasury Secretary Scott Bessent joins us exclusively in just a moment. His first interview since the Treasury announced new buybacks in the bond market and intervention this week.

**Carl Quintanilla** (1:20)
Then St. Louis Fed President Alberto Musalem joins us in an exclusive interview while he says the Fed probably should have hiked back in July.

**Sara Eisen** (1:27)
Let's start, though, with this bond move. Yields are rebounding today after the Treasury increased its buyback limit on longer dated securities yesterday. And joining us now in a CNBC exclusive interview to discuss is Treasury Secretary Scott Bessent. Secretary Bessent, welcome back. It's good to see you.

**Scott Bessent** (1:42)
Sara, good morning. Good to see you.

**Sara Eisen** (1:44)
So talk us through what you were trying to do here by announcing the increased size of the buybacks.

**Scott Bessent** (1:51)
Yeah, we're trying to signal that we think that this is a thinly traded area of the market, that we're in August, and there's been a lot of corporate issuance that's influenced the market. And we believe that there are many underlying factors in turn that the market is not looking at. And we are going to make a market in these. We routinely do buybacks, and we're going to increase the size of the buyback. And you know, Sara, I would note that it could be more than the $4 billion per issue.

**Sara Eisen** (2:29)
Yeah, I was going to ask how big this could get. If the signal here is that you're not happy with the direction of yields, you know, they've gone back the other way. We've erased most of the treasury rally that you got yesterday with that big surprise. So how much more are you willing to do?

**Scott Bessent** (2:45)
Well, again, we have a big tool kit, so we'll see, and part of it is signaling here, and to show that we believe that the yields don't reflect the underlying fundamentals. This Iran conflict, we will get on the other side of this. We don't know when, and we can talk about the economic measures we're going to be taking against Iran in a minute.
We believe that the liquidity, especially in the 30-year point, is very poor, and we are, in the administration, we are announcing, probably at the end of this week, beginning of next week, an increased focus on fiscal consolidation, and it's coming from President Trump. Russ Vogt and myself will be examining both on the revenue side and the cost side of what we can do.

**Sara Eisen** (3:40)
Yeah, because that's where I was going to go, and where a lot of the analysis is focused, as you know, Mr. Secretary, which is a strong signal from the administration on the buybacks, but the fundamentals are ultimately what is going to prevail here in the bond market, and the fundamentals are hard to ignore when it comes to the size of our debt with public debt increasing to now $40 trillion.

**Scott Bessent** (4:02)
Yeah, I mean, look, Sara, there's nothing magic about the $40 trillion number, and we can grow our way out of that.
But what we do want to signal is I think that there's been a lot of misinformation in terms of what's going on with the deficit, what's going on with the deficit to GDP. We actually had a fiscal consolidation for the calendar year 2025
We were at about 5.7% of GDP. And one of the things that's temporary here that's influencing the deficit has been these tariff refunds. And we won't have to do that again. And the ambassador Greer, through the 301 process, is re-implementing the same level of tariffs. And I would expect that our 2026 tariff income was going to be roughly what it was in 25 And we're going to be able to keep that in terms of the budget consolidation. The other big item in the budget that we're seeing is the hit that we're taking to revenues for the immediate expensing of factories and of equipment and farm structure. And I think that if people sit back and think that's not government spending, that is actually an investment in the future. And we're increasing the tax base and that is what measures the wealth of a nation, is the ability to increase after-tax return on capital. So we're pulling back the slingshot here. We have a lot of potential energy that will turn into kinetic energy during this year, next year as these factories come online.