Bessent to testify before Congress as bond yields hit 3-year high

Treasury Secretary Scott Bessent appears before the House Financial Services Committee on Tuesday for his annual testimony.

The hearing is formally about oversight of the International Monetary Fund, but lawmakers are expected to press him on inflation, energy prices, interest rates, and the national debt.

In prepared remarks obtained by CNBC, Bessent plans to highlight what he calls the success of sanctions on Iran.

He will also point to wage gains for lower-income workers.

More than 64 million tax returns have claimed a tax cut passed last year, he plans to say.

Rising costs likely to dominate questions

Oil prices have climbed above $100 a barrel as the Iran conflict has intensified.

Gas now averages $4.32 a gallon in the US, up $1.14 from a year ago, according to AAA.

Diesel costs $6.23 a gallon, up $2.54 over the same period.

The consumer price index is up 3.4% from a year ago, which has pushed investors to bet on the Federal Reserve raising rates.

President Trump has publicly pushed the opposite, calling for rate cuts.

Bessent is a longtime friend of Fed Chair Kevin Warsh and meets with him weekly.

The national debt has passed $40 trillion, and budget deficits are running at roughly twice the 3% of GDP target Bessent and Trump had promised.

Bessent’s bond market bet hasn’t paid off

Bessent entered office saying he wanted to push the 10-year Treasury yield below 4%.

Instead, the yield briefly touched 5% on Monday, its highest level in three years.

Last month, as yields climbed, Bessent tripled the size of Treasury’s bond buyback program to try to bring them down.

Yields are higher now than before he acted.

Economists say the move actually backfired: instead of calming the bond market, it signaled to investors that Treasury itself was worried about rising rates, which pushed yields even higher.

Critics point to a deeper problem.

The buybacks Bessent promised add up to about $6 billion, a small amount next to the $32 trillion Treasury bond market.

Legendary investor Stanley Druckenmiller, Bessent’s mentor, warned that artificially suppressing yields would backfire.

Economists across the political spectrum argue the real issue is the federal deficit itself, not a market malfunction the Treasury can fix with buybacks.

Unlike the Federal Reserve, which can create money to calm markets during a crisis, the Treasury has no such power.

That leaves Bessent trying to manage a problem with tools that critics say were never built for the job.

What’s still working in Bessent’s favor

Despite the criticism, the broader economy shows some strength.

The S&P 500 is up about 27% since Trump took office, and unemployment stands at 4.1%.

Bessent’s prepared testimony notes that wages for the bottom 25% of earners have grown faster than for top earners.

Still, mortgage rates, which move with the 10-year yield, have neared 7% for the first time since June 2025.

That leaves Bessent facing a hearing where rising borrowing costs, not his stated wins, may dominate the questions.