Posted on 08/26/2026 6:56:10 AM PDT by Twotone
Treasury Secretary Scott Bessent is determined to put the “fear of God” into the so-called “bond vigilantes” who have been dumping US Treasurys and sending interest rates soaring, according to a private sector economist with knowledge of his thinking.
Bessent is particularly worried that institutional investors will continue to sell long-dated Treasury bonds in a trade that will send prices lower – and yields on the all-important 10-year bond surging to 5%, according to Wall Street executives who deal with him regularly.
That, in turn, could snuff out economic growth as the midterm elections approach since it’s the 10-year Treasury bond on which many consumer rates are pegged – including 30-year, fixed-rate home mortgages.
In response, insiders say Bessent has formulated a plan that could escalate if the vigilantes continue to push up interest rates. It goes beyond the $4 trillion in longer-dated bonds the Treasury purchased last week – and could include temporarily halting the issuance of certain long-dated debt like the 20-year Treasury bond, these people say.
“Bessent knows what he’s up against – it’s how he made his living,” one economist with ties to the White House said, noting that the Treasury secretary was a hedge fund manager before joining the administration.
(Excerpt) Read more at nypost.com ...
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The US government is getting to buy back its debt at less than face value because the Congress is fiscally irresponsible.
Mortgage rates can be compensated for. If the mortgage rate is 6%, the mortgagor might pay as if the rate is 4.8% and the mortgage balance might be increased by .1% each month. That typically isn’t done because house prices are absurdly high and mortgagees want the balance reduced to reduce risk.
Another possibility is to not bring the full amount of the price to the settlement table if the mortgage rate is too high. If a house is bought for $400,000, only $350,000 might be brought to the settlement table. If the mortgage rate is 7%, the buyers might have to pay on the $50,000 balance if rates fall. If the rates fall by more than say 1%, the mortgagors might have to either pay the $50,000 (by refinancing) or 7% on the $50,000.
Agreed. The bind market is not like the stock market.
BOND market! ;)
Truly observant Muslims neither pay or charge interest.
The buyers might buy a 20% share of a house and rent the 80% share at 80% of the then current house rent.
The buyers then might buy an additional 4% each year. In 20 years, they’d own the house free and clear.
If the house needs repair, the repairs would be paid for in proportion to the ownership. Property taxes would also get paid in proportion to ownership.
I hope he is successful in burying the bond vigilantes in their trades.
It should be born in mind that much of the housing stock leaves much to be desired.
A house built in the 1960s is now 60 years old.
“I hope he is successful in burying the bond vigilantes in their trades.”
Mortgages might include an option clause:
The mortgagee shall get an assignable option to buy the house at the issued mortgage amount, less 6%, less principal repayments made, plus the down payment amount, wherein those amounts are compounded at the mortgage rate less 2%, less the cost of repairs that have become necessary:
1. after the mortgage is 10 years old and not paid off
2. for a period of 60 days after any now unscheduled extra payment is made or need be made toward the mortgage.
That clause would basically allow the mortgagee to get a real 2% return on its money regardless of federal fiscal irresponsibility.
The Brits typically and simply get mortgages whose rates are adjusted every five years.
When you fight the market you may win for a while—but eventually the market will grind you down into fine dust.
Your federal government at work
Detroit 2009-2023:
May I propose an alternate solution: Exercise fiscal responsibility instead of running a two trillion dollar deficit during economically “good” years which even the Keynesians would say is not the time to prime the pump.
This sounds like a name made up term like "vulture capitalism", when people don't like a free-market free-marketing.
The bind market closely follows the bond market!
Yes they can. That doesn’t mean that if you have a system for buying and selling bonds that I think people should be punished for selling more than you like.
Interesting you mention price gouging too. That’s another one made up by cry babies when things don’t go their way.
Price controls always create shortages. High prices in disasters have the positive side effect of preventing hording.
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