Bessent’s Bond Battle, Go Broad Not Bearish, and Stripe’s Strategy 8/20/26

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**Kelly Evans** (1:01)
Thank you very much, Scott. We've got Walmart down, bond yields and oil up, and we're heading back toward session lows this hour. I'm Kelly Evans and welcome to The Exchange. We have Steve Leesman and Eamon Javer standing by to run through today's big moves, including fresh headlines from Treasury Secretary Scott Bessent. And we'll talk to Neil Hennessy of Hennessy Funds, who has been warning, we are overdue for a correction. Plus Mitch Daniels, the former OMB director, is also here to weigh in on the Treasury's maneuvers. And we'll dig in to why Walmart is down 9% today, plus the significance of Stripes Deal for OpenRouter, all of that coming up. But let's begin with this backup in bonds, which has put yields back to where they were before the Treasury's surprise announcement yesterday, that it would double its repurchases of longer term debt. Treasury Secretary Scott Bessent commenting on that and going beyond that announcement just two hours ago on CNBC. Steve Leesman is here with more.

**Steve Leisman** (1:55)
Steve, you got that right, Kelly. Treasury Secretary Scott Bessent in an exclusive CNBC interview this morning, putting the market on notice that the controversial bond market intervention yesterday may end up being above the bottom end of the $4 billion minimum that the Treasury announced.

**Scott Bessent** (2:11)
We routinely do buybacks, and we're going to increase the size of the buyback. And you know, Sarah, I would note that it could be more than the $4 billion per issue.

**Steve Leisman** (2:22)
The Treasury Secretary's unprompted comment suggested he may not have been satisfied with the market's reaction this morning, which has seen the 10-year now trading around $4.70 undo the benefits from yesterday's surprise action, calling it a Treasury twist in which the Treasury buys long-dated bonds that it funds with short-term bills. Bessent defended the action. He said it would address illiquidity in parts of the bond market, especially around summertime. Bond market is not reflecting, he said, underlying fundamentals. And the Trump administration will announce a focus on deficit reduction maybe by the end of this week or maybe beginning next week. The bond market surprised by the action and that creates some long-term concerns. Lou Crandall from Rights and ICAP tells me the long end was already having to contend with increased risk premiums in the wake of Chairman Wars' July 29th press conference. Creating additional uncertainty about the Treasury's commitment to a regular and predictable financing strategy is not helpful in the long run. The big change might be this, Kelly. What was once Don't Fight the Fed may now become Don't Fight the Treasury, except the Fed's arsenal is much bigger than the Treasury's.

**Kelly Evans** (3:21)
And the irony is that Bessent fought, was it the Bank of England, right? Back in the early 90s, successfully, right? Wasn't he part of that Druckenmiller team?

**Steve Leisman** (3:31)
I don't know that, but he has successfully been involved in essentially gaining the other side of this as a hedge fund manager and a hedge fund asset manager. He's done that and now he's on the other side. And the question becomes Kelly, this idea of regular and predictable. And a lot of the talk was not what they did. I just want to be clear about that because there's been talk about the need to do this for a very long time, come in and increase these buybacks of these off-the-run securities. Off the run, of course, being a 30-year treasury, seven years later is now a 23-year treasury. And there's a lot of illiquidity in that and it pays for the treasury to do that. But doing that two weeks after the refunding announcement, doing that before the $20 billion auction, that's not a way to treat your customers in a nice way.