STAN DRUCKENMILLER BLASTS BESSENT’S TREASURY BOND BUYBACK STRATEGY Legendary investor Stanley Druckenmiller, Scott Bessent’s former boss, is sharply criticizing the Treasury Secretary’s attempt to push down long-term yields. In a new WSJ op-ed, Druckenmiller argues Treasury’s decision to double long-dated bond buybacks from $2B to at least $4B per operation risks crossing the line from liquidity management into outright yield suppression. “Once markets believe Treasury is defending a price, every rise in yields becomes a test of official resolve, and the operations must grow to survive the tests.” Druckenmiller argues there is no obvious market dysfunction requiring intervention. Treasury auctions are functioning, volatility is contained and markets remain orderly. With inflation above target, deficits around 6% of GDP and national debt above $40T, rising yields may simply be the bond market appropriately pricing America’s deteriorating fiscal position. Suppressing those yields also removes one of the few remaining forces imposing fiscal discipline on Washington. Druckenmiller goes even further, arguing that buying long-duration Treasuries while issuing short-term bills effectively removes duration from the market and begins to resemble a small-scale form of QE conducted by Treasury rather than the Fed. And once traders believe Treasury is defending a particular level of yields, they have an incentive to test just how committed officials are to that defense. His solution is simple. Let the bond market determine the price of government borrowing and fix the underlying fiscal problem through lower deficits, entitlement reform and better debt management. The criticism is particularly notable given the history here. Bessent worked for Druckenmiller at Duquesne Capital Management after both had worked under George Soros. There was a compelling story that some of the greatest macro minds of their generation were finally in positions to confront America’s fiscal problem. Druckenmiller’s op-ed throws some serious cold water on that idea. If Washington refuses to address the underlying fiscal problem, increasingly aggressive attempts to suppress yields may only invite the bond market to test its resolve.