Bessent's bond strategy raises inflation concerns

Bessent's bond strategy, which aims to calm the market, raises inflation concerns. In the past few days, investors have taken into account the possibility of higher inflation, indicating that the Ministry ' s efforts this week to improve the liquidity of the Government ' s debt market raised concerns about the broader policy implications. The so-called breakeven rate (inflation-fixed bond yields) rose throughout the curve to its highest level in two months. The 10-year period rose to 2.34 per cent on Thursday, the highest since 10 June. Although these indicators may fluctuate and markets do not anticipate uncontrolled inflation, they also indicate rising inflation concerns. The Ministry of Finance announced on Wednesday that it would double the scale of its typical debt buy-back of at least $2 billion, a routine operation that began in 2024 to provide a market for long-term debt. Although Minister of Finance Scott Bessent maintained that the move was not an attempt to lower the rate of return, it was implemented after 10 and 30 years of national debt had reached its highest level since the 2008 global financial crisis. Market concerns about inflation are rising, although some market participants do not consider the recent surge in rates of return to be a problem。