Trump floats military ‘intervention’ in bond markets as Treasury yields soar

WASHINGTON, DC: President Donald Trump has floated the idea that the military might somehow step in to help control bond markets. He made the offhand remark just before getting on Air Force One on Friday, August 21, when reporters asked him about Treasury Secretary Scott Bessent’s push to lower the stubbornly high yields on long-term government bonds.

This happened right after the Treasury Department caught Wall Street off guard on Wednesday; it said it would double its purchases of long-term government bonds next month. The goal here is to bring down borrowing costs, which spiked to a 19-year high on the 30-year Treasury yield only days earlier. At first, the news sent bond prices soaring and yields dropping, but it didn’t last. Yields went back up, and now nobody seems sure what comes next.

Trump says Scott Bessent acted on his own initiative

Reporters wanted to know if Trump had told Bessent to take action on surging long-term government bond yields, or if the push came from the president himself.

Trump said he hadn’t been involved and gave credit to Bessent, calling his instincts solid.

“No,” then he replied. “Not at all. No, he’s a very capable man. He wanted to do it. He’s very good at it. He is a good touch. Very good natural touch for the bonds and interest. And he did that? Yeah.”

When the reporter followed up by noting that yields had risen again since the announcement and asked whether Trump had spoken with Bessent about further intervention, the 80-year-old's answer shifted into unexpected territory.

"We have many types of intervention. That's one," he said, before adding, "The ultimate intervention is our military. And if we have to use that, we will."

Scott Bessent recently talked about his 'big toolkit'

Bessent insisted Thursday that he has a "big toolkit" at his disposal to quell liquidity problems in the government debt market and restore calm. 

While that’s true in itself, a two-pronged effort he has deployed so far, accelerated buybacks and an effort to talk the market into accepting the rationale, has met with little success.

Bessent appeared on CNBC with assurances that the intervention was merely aimed at providing market liquidity and not at trying to control the yield curve.

While yields initially nudged lower, they quickly rebounded amid criticism of how the prior day’s announcement was rolled out, leading one analyst to characterize the appearance as having “minimal impact” on the market pressures.

After Trump's tarmac remarks, it remained unclear whether the two men were describing the same set of options.