WASHINGTON — Financial markets are being pulled in several directions at once as the Trump administration intensifies its economic pressure campaign against Iran, the U.S. Treasury moves more aggressively into the long-term bond market, and investors react sharply to major corporate developments at Walmart and Moderna.
At the center of the latest market drama is Treasury Secretary Scott Bessent, who said the U.S. government is prepared to increase its purchases of longer-dated Treasury securities beyond the newly announced $4 billion-per-operation level.
The move comes after long-term U.S. Treasury yields climbed to levels that have unsettled investors and raised concerns about the cost of government borrowing, mortgages and corporate financing.
The Treasury officially announced on Aug. 19 that it would at least double the maximum size of certain liquidity-support buyback operations from $2 billion to at least $4 billion per operation, beginning Sept. 9. The purchases will focus on longer-dated securities in the 10-to-20-year and 20-to-30-year sectors.
But Bessent’s comments suggest the $4 billion figure may not be the ceiling.
“We’re going to increase the size of the buyback,” Bessent said in a CNBC interview, adding that the amount could be more than $4 billion per issue. Reuters separately reported the comments and said Bessent described the intervention primarily as an effort to improve liquidity in a market that has become increasingly difficult to trade.
Why the Treasury Is Buying Its Own Debt
The Treasury’s buyback program is not the same as the Federal Reserve’s quantitative easing.
Instead, the government can repurchase previously issued Treasury securities in the secondary market. The stated goal of the latest expansion is to improve liquidity, particularly in older, less actively traded long-term securities.
The timing, however, has attracted intense attention.
The 30-year Treasury yield recently reached its highest level in roughly two decades, while the 10-year yield has also remained elevated. Reuters reported that Bessent believes the recent rise in long-term yields does not fully reflect the underlying strength of the U.S. economy.
The problem for policymakers is that Treasury intervention alone may not solve the deeper concerns surrounding America’s enormous borrowing needs.
U.S. government debt has now crossed the $40 trillion threshold, adding another layer of pressure to an already volatile bond market.
The Market Didn’t Stay Calm for Long
The initial Treasury announcement briefly pushed long-term yields lower.
But that relief proved temporary.
By Thursday, yields had rebounded, with the 10-year Treasury yield rising toward 4.7% and the 30-year yield remaining above 5.2%, according to market reports.
The Wall Street Journal reported that investors largely shrugged off the expanded buyback plan as bond yields moved higher again.
The Washington Post likewise reported that Treasury’s efforts had so far failed to deliver a lasting decline in longer-term borrowing costs.
That has intensified a debate among investors over whether the Treasury’s intervention can address the underlying forces pushing yields higher—including federal borrowing, inflation risks, energy prices and uncertainty surrounding Federal Reserve policy.
Trump Turns Up the Pressure on Iran
At the same time, President Donald Trump is escalating the economic pressure on Iran.
Bessent said the administration is preparing additional economic measures against Tehran, while Trump has described the campaign as a major economic offensive.
The conflict is also feeding into energy markets.
Higher oil prices caused by Middle East tensions can increase transportation and production costs, potentially making it more difficult for policymakers to bring inflation down.
Reuters reported that Bessent acknowledged the uncertainty surrounding the Iran conflict while arguing that the economic effects would eventually ease.
For investors, that creates another complication: a prolonged energy shock could keep inflation elevated and make it harder for central banks to loosen monetary policy.
Walmart Delivers Another Warning About the American Consumer
While Washington battles bond-market and geopolitical pressures, another warning is coming from corporate America.
Walmart shares plunged 9.2% on Thursday after the world’s largest retailer reported its slowest quarterly comparable-sales growth in six years and issued a weaker outlook for the following quarter.
The result was particularly significant because Walmart has traditionally been viewed as a strong indicator of the health of the American consumer.
The company said higher gasoline prices and changing consumer behavior were weighing on shoppers.
The sharp share-price decline therefore raised a broader question for investors: Is the U.S. consumer finally beginning to crack under the pressure of higher prices and rising household expenses?
The answer is not yet clear.
But Walmart’s results have added to growing evidence that consumers are becoming more selective about where they spend their money.
Then Moderna Delivered the Week’s Biggest Stock-Market Shock
On the opposite end of the market spectrum was Moderna.
The biotechnology company stunned investors after announcing encouraging late-stage results for a personalized mRNA cancer treatment developed with Merck.
The treatment, intismeran, is designed to work alongside Merck’s Keytruda for melanoma patients.
Reuters reported that the combination reduced the risk of melanoma recurrence and spread compared with Keytruda alone in a late-stage trial.
The announcement sent Moderna shares soaring.
Reuters reported that Moderna’s market value increased by roughly $30 billion in a single session, while other reporting put the one-day increase in market capitalization closer to $45 billion depending on the point of measurement.
The rally was more than a stock-market spectacle.
Investors are now looking at Moderna’s oncology pipeline as a possible path beyond the company’s declining COVID-era revenue.
Still, analysts caution that the company has not yet disclosed all of the detailed trial data, and regulatory approval is still required.
In other words, the cancer-vaccine breakthrough is significant—but it is not yet a guaranteed commercial success.
Bitcoin Gets Another Boost
Bitcoin has also emerged as one of the biggest beneficiaries of the week’s market turbulence.
The cryptocurrency rallied sharply as investors reacted to the weaker dollar, Treasury’s bond-market moves and renewed political support for digital assets.
Bitcoin climbed toward the upper-$70,000 range on Friday, with market reports showing gains of roughly 6% to 8% during early trading.
The rally has also lifted publicly traded crypto companies, including major bitcoin-linked firms.
Trump’s push for pro-crypto legislation has provided another catalyst, although bitcoin remains highly volatile and its price can move rapidly in response to changes in liquidity, interest rates, regulation and investor sentiment.
One Week, Four Very Different Signals
Taken together, the latest developments are sending a complicated message about the U.S. economy.
Treasury: Washington is trying to stabilize the long end of the bond market.
Iran: Geopolitical tensions threaten to keep energy prices elevated.
Walmart: Consumer spending may be losing momentum.
Moderna: Investors are aggressively rewarding breakthroughs that could create entirely new revenue streams.
Bitcoin: Crypto is benefiting from a combination of political support, dollar weakness and shifting expectations around financial conditions.
The result is an unusually volatile market environment in which yesterday’s winner can quickly become today’s loser.
Moderna, for example, surged dramatically after its cancer-vaccine news, only to retreat sharply the following session. Walmart experienced the opposite kind of shock, with investors aggressively selling the stock after its outlook disappointed.
The Bigger Question Is What Happens Next
The Treasury’s next move may now be the most closely watched.
Bessent has indicated that the buyback program could become larger than the initially announced $4 billion-per-operation level.
But the market has already demonstrated that investors are not convinced that bond purchases alone can solve the country’s longer-term borrowing problem.
The bigger test will be whether Treasury can improve liquidity and bring long-term yields lower without creating fresh concerns about fiscal policy, inflation, the dollar or the Federal Reserve’s independence.
Meanwhile, markets will continue watching oil prices, developments in the Iran conflict, consumer spending and the Federal Reserve’s next moves.
For investors, the message is increasingly difficult to ignore:
Washington is trying to control the financial shock—but the market is still deciding whether it believes the strategy will work.
And that may be the real story behind the latest market swings.
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