Treasury Secretary Scott Bessent has repeatedly cautioned investors that betting against him will prove costly, insisting that whether they are driving up oil prices, pushing down the yen, or, most critically, lifting US Treasury yields, they are making a significant error. He argues that he stands on the opposite side of these trades, holding valuable insights into government policy plans that they lack, a concept known in game theory as information asymmetry, which the former hedge fund manager frequently cites. Over the past three weeks alone, he has publicly referenced this at least four times, including Tuesday, when he challenged currency traders, saying, "If you want to bet against me, go ahead."

Yet the markets remain unconvinced, at least in the bond and oil arenas, even if the yen market has seen swift US support for Japanese officials. Since Bessent began lobbying these two markets, which are vital to American households' well-being ahead of key midterm elections, both have moved against him. Benchmark crude prices have surged past $100 a barrel, pushing up retail gasoline prices, while on Wednesday, the Trump administration launched its first larger bond buyback program in an attempt to suppress the benchmark 10-year Treasury yield, a key driver for mortgages and other borrowing costs. The effort backfired, however, as yields spiked, extending a two-week selloff and hitting a three-year high of 4.85%.

These selloffs have exposed the inherent risks in Bessent's approach, which mirrors that of Trump. Verbal intervention only works when traders believe the government will implement sufficiently robust measures to persistently impact markets. Yet on the two factors perhaps most critical to pushing up bond yields and oil prices—the US budget deficit and the Iran war—Bessent's influence appears limited. "The market has seen through his bluff," said Mark Spindel, founder and chief investment officer of Potomac River Capital, noting that the massive federal deficit, combined with concerns over the Fed's ability to curb inflation, overshadows Bessent's efforts. "I think these issues are more impactful to markets than Bessent's bravado," he added.

Historically, governments have executed successful interventions, such as the Plaza Accord in the 1980s, which depreciated the dollar, or European authorities' efforts to stabilize the euro after the global financial crisis, which eventually succeeded in 2012 when the ECB chief vowed to do "whatever it takes." Japan also managed yield curve control for years. However, such measures often rely on central banks with nearly unlimited power to persistently steer markets, making shorting them highly risky. Bessent's toolkit is far more constrained, as he is hemmed in by the Trump administration's nearly $2 trillion fiscal deficit and the energy shock from the Iran war, both of which have been lifting US Treasury yields over the past six months.

Bessent has emphasized that he is not fixated on short-term market movements, explaining that his goal is to "slow things down" and ensure traders "focus on the fundamentals." A Treasury spokesperson declined to comment, while White House spokesman Kush Desai stated that Bessent has demonstrated adept skill in financial market operations, pointing to his successful efforts last year to stabilize the Argentine peso. "Secretary Bessent is not only a master of financial markets but also one of the most transformational Treasury secretaries in modern history," Desai said. "He has consistently leveraged and enhanced his influence and the strength of the American economy to benefit President Trump and the American people."

Despite this, Bessent's attempts to talk down the bond market have so far been met with skepticism on Wall Street, as they do not address the factors driving yields higher. Last month, Bessent surprised markets by announcing plans to expand Treasury buybacks, stating in interviews that current yield levels "do not reflect the fundamentals." He mentioned that a fiscal plan would be forthcoming (though none has yet materialized) and talked about avoiding "hundreds of billions" in fraud, echoing proposals from Elon Musk's budget-cutting team in early 2025 that ultimately fizzled out. "By my count, he's tried three times to get the long end of the yield curve to where he wants it, and each time it's failed," said Michael Strain, director of economic policy studies at the right-leaning American Enterprise Institute. "He's lost credibility."

This is not to say Bessent's interventions have been entirely ineffective. His collaboration with Japan to support the yen has, at least for now, sparked a significant rebound, likely preventing Japanese authorities from selling US Treasuries to raise dollars for unilateral defense. Additionally, his intervention in Argentina's markets last year averted a financial crisis. Moreover, the Treasury could continue to expand buybacks or reduce long-term debt issuance to stem yield increases. Strategists at Bank of America, Ralph Axel and Katie Craig, suggest that expanding repurchases "could well be the opening move in further US policy to cap long-end yields." Others believe Bessent may intensify efforts to prevent the 30-year Treasury yield from breaking above 5.3%, which they call an unbreachable line in the sand; it stood at 5.29% late Wednesday. "The Treasury secretary's put should be taken seriously," said strategists at Citi, including Jason Williams.

Bessent is also well aware of the risks of government intervention, having gained fame over three decades ago for helping George Soros bet against the Bank of England's defense of the pound, a strategy destined to fail. Early last year, he stated that the bond market would ultimately be a primary measure of his success, predicting that the 10-year Treasury yield would fall once the government controlled the budget deficit and initiated a period of low-inflation growth. While yields did decline, they spiked again after Trump launched the Iran war in late February, and the selloff intensified in July on doubts about new Fed Chair Kevin Warsh's ability to curb inflation.

Bessent has also been forced to rely on economic sanctions to hasten the end of the Iran war, a strategy he calls an "economic exclusion" plan, threatening sanctions on global banks and other entities that maintain business ties with the Islamic Republic. He has compared these sanctions to the Normandy invasion that helped end World War II. Ahead of unveiling his plan, he said the market "misunderstood" what was coming, adding, "We're dealing with information asymmetry again." However, no major actions against Iran's key trading partners have materialized since, and oil prices continue to climb. Stephen Myrow, managing partner at Beacon Policy Advisors and a former Treasury official under George W. Bush, notes that Bessent's recent rhetoric mirrors Trump's style, with the president repeatedly claiming imminent victory over Iran despite the ongoing war. Myrow points out that if markets continue to move against Bessent, it poses a risk. "This isn't the type of thing markets like," he said. "Markets don't want someone perceived as weak, but they also don't want a showman or someone who's overly theatrical."

Nathan Thooft, chief investment officer of the multi-asset solutions team at Manulife Investment Management, believes Bessent still retains "enough credibility, policy tools, and market influence to make investors think twice before heavily betting against him." Yet, he added, "Markets tend to test policymakers eventually, and their power is not unlimited."