US President Donald Trump recently made an unexpected statement suggesting that the US military could ultimately be used to intervene in the Treasury market. This remark quickly sent shockwaves through the financial and journalistic circles, prompting various parties to scramble for the underlying policy logic and feasibility.
Speaking to reporters before boarding Air Force One, Trump was asked whether he had discussed alternative intervention methods with Treasury Secretary Scott Bessent, given the fading effects of previous measures to lower Treasury yields. Trump not only stated that there are multiple ways to intervene but also described military deployment as the ultimate intervention, emphasizing that the government would consider it if the situation demands.
Trump's remarks came amid severe volatility in the US bond market. Recently, the yield on the 30-year US Treasury note briefly surged to its highest level since 2007. To cope with the pressure of soaring borrowing costs, Treasury Secretary Bessent announced a doubling of the long-term Treasury buyback program. Although the news initially drove up long-term Treasury prices and pushed down yields, it only provided a brief respite for market sentiment, with yields rebounding to multi-year highs a few days later.
When discussing market volatility, Trump sought to distance himself from the Treasury's buyback operations. He admitted that he did not directly ask Bessent to take intervention measures, while highly praising the Treasury Secretary's professional competence, noting his excellent judgment in managing the bond market and interest rates. However, it was the mention of military intervention that became the most eye-catching focus of the entire fiscal policy discussion.
Mainstream financial and political media have generally expressed confusion over this claim. Multiple journalists and analysts pointed out that there is currently no known policy mechanism through which military action could influence Treasury yields. Furthermore, considering that countries like Japan and the UK are major overseas holders of US Treasuries, the logic of military intervention is clearly inconsistent if sovereign creditors manage their Treasury assets autonomously.
This further highlights the deep-seated narrative currently facing the US bond market. The persistent rise in Treasury yields essentially reflects market concerns over multiple risks, including the continuous expansion of the fiscal deficit, the potential for tariff policies to trigger a rebound in inflation, and the testing of the Federal Reserve's independence under the new administration.
At present, it remains unclear whether Trump's statement was based on genuine policy deliberation, rhetoric related to recent geopolitical military posturing, or simply an impromptu remark in response to a reporter's question. With the White House yet to provide further explanation, financial markets and observers are still trying to decipher more signals from this unconventional remark.
