Billionaire investor Stanley Druckenmiller has criticised US Treasury Secretary Scott Bessent’s decision to expand purchases of long-dated government bonds, arguing that policymakers should allow the bond market to determine yields rather than attempting to influence prices, according to a report by Bloomberg.
Druckenmiller, who mentored Bessent during the Treasury secretary’s early career as a hedge fund trader alongside George Soros, made the comments in a Wall Street Journal opinion article as the Treasury prepares to increase its buying of longer-maturity debt.
The Treasury has said the expanded buybacks are intended to improve liquidity in the long-end of the US government bond market. The purchases could also help lower borrowing costs for businesses and households if they succeed in putting downward pressure on yields.
Druckenmiller, however, questioned the rationale for the intervention, arguing that bond prices provide important information about investors’ assessment of the government’s fiscal position.
His criticism represents an unusually public disagreement between the veteran investor and his former protégé. Druckenmiller built his reputation through large macro trades in currencies, bonds and other markets, including during his years working with Soros.
The pair’s investment approach frequently involved betting against governments or central banks when market forces were moving in the opposite direction.
The intervention comes as 30-year Treasury yields have climbed to levels last seen almost two decades ago. The rise reflects investors demanding greater compensation for holding longer-term US government debt as federal borrowing continues to increase.
US government debt has now surpassed $40tn, intensifying pressure on policymakers to contain financing costs.
Druckenmiller argued that the rise in yields should not necessarily be viewed as a problem for the Treasury to correct. Instead, he sees the long-term Treasury rate as an important market signal about fiscal policy and investor confidence.
His argument is that attempts to suppress that signal could simply shift financial pressure elsewhere rather than eliminate it.
The strategy has already attracted concern among some investors and strategists, who see the Treasury’s growing involvement in the bond market as a departure from its traditional role as an issuer of government debt.
