Trump has shackled himself to a monster he must 'keep feeding': insider

Bloomberg reports President Donald Trump appears to have tied himself to something that could eat him.

“Treasury Secretary Scott Bessent’s unusual move to supersize his department’s debt buyback program stumbled on Wednesday, when an announcement on the size of the first enlarged operation proved insufficient to halt market declines,” reported Bloomberg, referring to Bessent’s plan to buy up to $6 billion of longer-dated debt.

Instead, Treasuries extended an earlier decline after the Treasury’s buyback statement, according to Bloomberg, with 10-year note yields hitting a fresh three-year high. Bessent aimed to pull those down after he took office last year, but they are defying him and hovering around their highest level since 2023.

Analysts say dealers had upsold predictions for Thursday’s buyback operation after Bessent publicly hawked the potential for purchases of over $4 billion, which was an upsize from the originally scheduled $2 billion cap. But the $6 billion announcement failed to produce the “shock and awe” investors were hoping for, said Steven Zeng, a strategist at Deutsche Bank AG.

“It’s like Treasury created this monster that it now has to keep feeding,” Zeng said.

Other analysts say it’s going to take more than a buyback scheme to undo the inflation damage of Trump’s disastrous voluntary war on an oil-producing nation — which is also bottlenecking the exports of other oil-producing nations in retaliation to Trump’s attacks.

“Another catalyst is likely needed to move longer-end yields lower,” Wells Fargo macro strategists Angelo Manolatos and Francis Brown wrote in a note to clients, said Bloomberg. “These could include a slowdown in growth and inflation, lower energy prices, less uncertainty around Fed policy, fiscal consolidation or a slowdown” in corporate debt issuance, they said.

The conflict in Iran has sent the price of oil and gas soaring, which subsequently impacts inflation, along with other economic policies, including Trump’s trade war against economic trade partners. The price of Brent Crude — an industry benchmark for oil — soared past $100 a barrel for the first time since late July after an Iranian proxy group struck energy sites in Saudi Arabia, as a result of Trump’s Iran attacks.

For now, the Treasury offered no further indication to Bloomberg that it is prepared to try even bigger buybacks.

“As it stands, Treasury brought a pea shooter to a tank battle,” Brown Brothers Harriman & Co representative Elias Haddad told Bloomberg.

Meanwhile, Politico reports that “Trump’s war in the Middle East for months has thwarted GOP plans to run on pocketbook issues this fall. Now, with the midterm elections mere weeks away, it’s likely too late to stem the political fallout from the sustained grind of expensive energy bills that threaten to spread to other consumer prices.”