The Big Beautiful Bill takes, and Bessent gives. That theme isn’t going anywhere, and lately, the tempo has picked up as the bond market has started to react. Since early May, the 10-year yield has climbed back toward the year’s highs. We’re now just 20 to 30 basis points away from a 10YR level that could push the average mortgage rate back to 7%. Bessent appears to be working hard to hold that resistance line.

The deficit is no surprise to markets; it’s been a known issue for years. But the velocity of change is what really matters now. Trade negotiations are still simmering in the background with no clear resolution, and the introduction of a nearly $4 trillion fiscal package on top of the existing $36 trillion in federal debt makes for an anxious bond market. The long end of the yield curve has responded accordingly.

This doesn’t necessarily mean foreign demand for Treasuries will collapse, as some have suggested. Demand had already been shifting, particularly from Asia, before tariffs came into the picture. What it does mean is that the buyer mix will evolve. Risk migrates, it doesn’t disappear.

As long-term yields face more upward pressure, Bessent has been actively trying to calm the markets, sometimes through commentary, other times through action. Verbal reassurance tends to deliver temporary or muted relief, but real action can provide meaningful support or at least stop the bleeding. A few recent moves stand out:

Capital Relief for Treasuries
Bessent is reportedly preparing to ease capital requirements on Treasury holdings as early as this summer. Under the current Supplementary Leverage Ratio (SLR), large banks must hold 5 percent capital against total assets, including U.S. Treasuries. Exempting Treasuries from this calculation would make them more attractive to banks and could increase demand. With deposit levels having rebounded, the timing may actually work. 

Stablecoin Regulation and Treasury Demand
The GENIUS Act, a bill aimed at regulating stablecoins, could also boost Treasury demand. Stablecoins, issued by private firms rather than the government, must hold reserves in safe assets like U.S. Treasuries. As of early 2025, stablecoin issuers collectively hold nearly $200 billion in Treasuries, more than many foreign sovereign holders. Regulation would likely increase reserve requirements and drive further demand. 

Treasury Buybacks
Another tool on the table is buybacks. Since 2023, the Treasury has been conducting buybacks of older securities, roughly $10 billion per month, to help smooth out liquidity and support new issuance. While Bessent has floated buybacks as a stabilizing tool, they haven’t historically been used this way. There’s no signal yet of buybacks scaling up, but if bond vigilantes turn up the heat, the Treasury may have to get more creative.