Scott Bessent’s Mentor Warns Treasury Bond Buybacks Are ‘Mistake’

Billionaire investor Stanley Druckenmiller, who mentored Treasury Secretary Scott Bessent during their years working together at George Soros’ hedge fund, warned Monday that the Treasury Department’s expanded bond-buyback program amounted to an attempt to manipulate prices and could undermine the government’s fiscal credibility.

Treasury announced Wednesday that it would double the size of its long-dated Treasury buybacks from $2 billion to at least $4 billion per operation, targeting bonds with maturities between ten and 30 years. The announcement came after the 30-year Treasury yield reached a 19-year high.

The move came as investors increasingly demanded higher returns to lend money to the federal government amid mounting concerns over Washington’s fiscal trajectory.

“The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management—and a mistake far larger than $4 billion suggests,” Druckenmiller wrote in a Wall Street Journal op-ed.

Druckenmiller argued there was little evidence of a dysfunctional Treasury market that would justify the intervention, pointing to orderly trading, contained volatility and the absence of failed auctions or forced unwinds.

Instead, he said the bond market was beginning to reflect the country’s worsening fiscal position, with inflation running above the Federal Reserve’s 2% target, the federal deficit approaching 6% of GDP and the national debt surpassing $40 trillion.

“The bond market wasn’t being a vigilante, as some would argue,” Druckenmiller wrote. “It was being a pushover that had finally begun to clear its throat, and Treasury moved to quiet even that.”

Druckenmiller’s criticism is notable given his longstanding relationship with Bessent, who worked under him at Soros Fund Management before eventually becoming the firm’s chief investment officer. Druckenmiller has previously spoken favorably of Bessent and his abilities, making the public criticism of Treasury’s strategy particularly striking.

Druckenmiller warned that attempts to suppress long-term yields could remove one of the few remaining mechanisms capable of forcing Washington to confront its fiscal problems.

“Every basis point of artificial yield suppression is a subsidy to procrastination,” he wrote.

He also warned that Treasury’s intervention could become increasingly difficult to unwind if investors begin to believe the department is committed to defending a particular level of bond yields.

“Yield management always begins as a technical operation and ends as a policy commitment,” Druckenmiller wrote.

The Treasury has defended the buybacks as a way to improve liquidity and manage the government’s debt portfolio, while Bessent has indicated the operations could potentially expand beyond the initially announced $4 billion size.