U.S. Treasury Secretary Bessent said that 「more governments have been overturned by the bond market than by grenades」, a warning that the report said could offer Federal Reserve Chair Warsh support as he faces policy pressure this week. Markets expect the Fed to raise rates at the September Federal Open Market Committee meeting that concludes this week, while the Trump administration has been pushing for easier financial conditions. At the same time, stronger-than-expected U.S. jobs data and inflation still running above the Fed’s 2% target are keeping pressure on the central bank to stay restrictive. Bessent had also said Trump understands the power of the bond market and believes Warsh will 「optimize the policy path」 based on inflation and economic growth. The article said White House attention to bond-market influence could give Warsh more room to maneuver, while also serving as a warning against putting excessive pressure on the Fed. Wall Street also warned that if the Fed keeps waiting while inflation stays elevated and energy prices deliver another shock, the bond market could force action by pushing up long-term Treasury yields.
BlockBeats reported on Sept. 14 that U.S. Treasury Secretary Bessent warned that 「more governments have been overturned by the bond market than by grenades」. The report said that view could become an important source of support for Federal Reserve Chair Warsh as he deals with policy pressure this week.
Markets expect the Federal Reserve to raise rates at the September FOMC meeting that concludes this week, while the Trump administration has been seeking further easing in financial conditions. At the same time, the latest U.S. employment data came in stronger than expected, and inflation remains above the Fed’s 2% target, leaving the central bank under pressure to keep policy tight.
Bessent had previously said that Trump understands the power of the bond market and believes Warsh will 「optimize the policy path」 based on inflation and economic growth. The article said that although the Fed should not cater to the bond market, the White House’s attention to its influence could give Warsh more room for policy maneuvering and also remind the Trump administration not to lean too hard on the central bank.
Wall Street also warned that if the Fed continues to wait while inflation stays high and energy prices deliver another shock, the bond market could force policymakers to act by driving up long-dated Treasury yields. If Warsh’s policy stance disappoints the market, it could also trigger questions about his independence and raise financing costs for both the government and the private sector.
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