Woofun AI reports that Scott Bessent, the U.S. Treasury Secretary, has adopted a strategy reminiscent of George Soros, aiming to stabilize the U.S. Treasury bond market through aggressive interventions similar to those that once pressured the Bank of England. This approach marks a significant departure from traditional fiscal management, positioning Bessent as "the most active fiscal secretary in decades when it comes to intervening in financial markets."

The immediate catalyst for recent market shifts was the announcement that the Treasury would "at least double" the scale of buybacks for 10- to 30-year Treasury bonds, a plan revealed only two weeks ago. On the day of the news, the yield on 10-year Treasury bonds dropped by about 6 basis points, while that on 30-year bonds fell by nearly 9 basis points.

Concurrently, the DXY hit a three-month low, reflecting the market's rapid adjustment to the new supply dynamics.

To understand the logic behind these moves, one must look back to 1992. In his early 20s, Bessent worked at Soros Fund, helping to build positions shorting the British Pound. On "Black Wednesday," the Pound was forced out of the European Exchange Rate Mechanism, resulting in Soros earning over $1 billion. An ex-advisor noted that Bessent could "see market vulnerabilities that others couldn't," a skill that defined his early career.

Bessent later returned to Soros as chief investment officer and in 2013 led another $1 billion short position in the Euro, reaping substantial profits. In 2015, he founded Key Square Capital Management with $4.5 billion, successfully betting on both Brexit and Trump's two elections. This "find the flaw and push accordingly" approach characterized his entire hedge fund career, which he now attempts to invert to stabilize markets under pressure.

The first step in Bessent's current strategy was intervention in the Euro. On July 31, the U.S. Treasury joined Japanese authorities to buy Euros, marking the first time the U.S. had directly intervened in the Euro exchange rate in nearly 30 years. Japan used about $87 billion in its foreign reserves to buy Euros in the last two days of July, while the U.S. Treasury "joined in the final stage, providing relatively limited funds but sending an important political support signal."

Notably, the Treasury sold Euros rather than Dollars and did so without prior notice to Eurozone authorities. The hidden motive was to protect the yield curve: Japan holds about $1.1 trillion in U.S. Treasuries, making it the largest foreign holder. If Japan had to finance the intervention alone, it might have been forced to sell Treasuries, pushing up long-term yields. Washington's involvement meant Japan had to sell fewer Treasuries, indirectly protecting the yields Bessent seeks to suppress.

The second step involved signaling reduced bond issuance, while the third was increasing buybacks. Bloomberg cited Brad Golding, portfolio manager at Christofferson Robb & Co., describing this as an "old-fashioned 'clear the screen' tactic"—a hedge fund technique involving placing orders with multiple large traders to trigger significant market fluctuations. Mark Sobel, a former U.S. Treasury official now working at OMFIF, told Bloomberg, 'He's definitely an activist, which reminds us of his hedge fund background.'

Bessent's actions conflict with the Treasury's traditional 'rules-based and predictable' approach to debt management. Gregory Faranello, head of U.S. interest rate trading and strategy at AmeriVet Securities, told Bloomberg, 'This violates the 'rules-based and predictable' principle—but this is the world we live in.' Ironically, Bessent's predecessor, Janet Yellen, tried to suppress yields by adjusting debt issuance in 2023, a move Bessent criticized as politically motivated. Stephen Miran, former chief economist for Trump, co-wrote a paper in 2024 criticizing 'Aggressive Treasury Issuance Tactics' (ATI). According to Bloomberg, Miran and Nouriel Roubini wrote, 'Once a party starts using ATI to stimulate the economy during election seasons, future administrations may follow suit.'

Woofun AI data shows that as of the first ten months of fiscal year 2026, the federal government's net interest payments have reached $963 billion, or about $3.18 billion per day, a 14% increase from the previous year. The yield on 10-year Treasury bonds is 4.72%, and that on 30-year bonds is 5.31%, with many old bonds issued at rates below 2% being refinanced at higher rates. So far in fiscal year 2026, the deficit is $1.8 trillion, up 5% from the previous year, driven by rising spending on social security, healthcare, defense, and interest on debt.

Robin Brooks, a senior researcher at Brookings Institution, told Bloomberg bluntly, 'This isn't addressing the fundamental issues—reducing debt and shrinking the fiscal deficit—it's an attempt to manipulate the yield curve.' John Velis, a macro strategist at BNY, added, 'Given current spending policies and the war, it will be very difficult to ease pressure on long-term rates.' The effectiveness of the Euro intervention is also doubtful; the U.S. Dollar against the Euro hit a high of 163.98 on July 23 but fell to 159.

43 by August 17. Maurice Obstfeld of PIIE said the intervention had little effect, noting 'foreign exchange intervention isn't a free lunch, not even a free cake.' Guy Miller, chief strategist at Zurich Insurance, told Bloomberg, 'This method only works for a while... if wasteful fiscal policy isn't addressed, it's unsustainable.' Peter Boockvar, chief investment officer at Onepoint Bfg, stated, 'He's fighting two huge markets at once—U.S. Treasuries and foreign exchange—that's an extremely tough battle.'

Bessent's logic is clear in his own words. On Fox Business, he said, 'Essentially, it's telling investors, okay, where the hockey puck is going—slide past quickly.' The problem is that shorting the Pound in 1992 involved exploiting an institutional weakness, whereas now he faces structural pressures driven by fiscal deficits, inflation expectations, and Federal Reserve policies. According to Bloomberg, Mark Sobel, who worked at the Treasury for nearly 40 years, believes Bessent is at least the most aggressive fiscal secretary since the early 2000s, but calls the Euro intervention unwise as it avoids the real fiscal consolidation the U.S. needs.