Donald Trump said on Aug. 21 that the "ultimate intervention" was "our military" when asked about the U.S. Treasury market, a remark the White House has yet to explain.
Trump made the comment while answering questions from reporters before boarding Air Force One. A reporter first asked whether he had instructed Treasury Secretary Scott Bessent to intervene in the government bond market. Trump said no, replying, "No, not at all," and described Bessent as highly capable and very good at handling the matter.
The reporter then asked whether, after yields rose again, Trump had discussed another form of intervention with Bessent. Trump answered, "We have many forms of intervention," before adding: "The ultimate intervention is our military, and if we have to use that, we will."
Treasury buyback move failed to hold yields down
Earlier in the week, the U.S. Treasury had already taken action. On Aug. 19, it announced that starting in September it would at least double the size of each long-dated Treasury buyback to $4 billion, a step that caught Wall Street off guard.
After that announcement, the 30-year Treasury yield fell from 5.34% to 5.18%. The report said 5.34% marked a 19-year high and the highest level since the period before the 2007 financial crisis. The next day, Bessent told CNBC that he had a "big toolbox," but declined to say what was inside it.
That decline did not last even a full day. Yields quickly moved back above 5.2%, giving back nearly all of the earlier drop. When reporters pressed Trump on whether there were other options left, they got the military remark.
White House has not clarified the meaning
The report raised the obvious question of how the military would intervene in the bond market, but no answer followed. The White House did not provide a formal response after media requests for clarification, and Trump did not elaborate further on what he meant by "military."
$4 billion remains small against the size of the Treasury market
According to the report, a $4 billion buyback is limited when set against more than $40 trillion in total U.S. government debt. That scale mismatch was cited as one reason yields gave back almost all of their decline within a day.
The report added that Treasury yields serve as a pricing anchor for risk assets. If yields fail to come down and keep rising, that would not be positive for markets such as stocks and Bitcoin.
Ray Dalio warns of debt crisis risk
Bridgewater founder Ray Dalio warned on Aug. 22 that the United States had only "three years" before heading into a debt crisis. He recommended selling U.S. Treasuries and shifting to gold and Bitcoin as hedges.