U.S. Treasury Secretary Scott Bessent published his response to Warren on Oct. 10, calling her criticism unfounded and defending the Treasury’s policies. The letter addressed scrutiny of government bond buybacks as investors continued to debate their effect on liquidity, yields and broader financial markets.

Bessent defends Treasury buybacks

Responding to Warren’s Oct. 7, 2026, letter, Bessent said her criticism showed an insufficient understanding of financial markets. He said the “unprecedented” market interventions described by Warren had been underway since May 2024.

Bessent said market participants view the Treasury buyback program positively because it increases liquidity in Treasury securities, reduces market volatility, increases the benefits of holding Treasury securities and delivers the best value for taxpayers.

Further improvements to the program will optimize liquidity in primary and secondary markets, he said. Bessent cited Treasury-market liquidity and the market’s performance relative to international peers as evidence that the measures are effective.

Bessent also criticized Warren’s support for the previous administration’s fiscal policy. He accused her of backing excessive spending under President Joe Biden even as inflation rose to its highest level in 40 years and the federal funds rate reached a 22-year high.

Bessent cites tax benefits

Bessent defended the Trump administration’s tax initiatives, saying they benefit U.S. families and workers. According to figures he cited for the most recent tax season, the average refund exceeded $3,400, an increase of 11% from a year earlier.

He said more than 30 million workers used an overtime tax break, more than 7 million people received a tax break on tips, more than 37 million seniors benefited from an increased tax deduction, and more than 34 million families received an expanded child tax credit.

Bessent also said the Treasury Department’s finance unit was staffed in line with historical benchmarks. He urged Warren to support nominations for future agency appointees.

At the end of the letter, Bessent repeated an offer to give Warren a crash course titled “Foreign Exchange for Dummies.” He said that if she passed a test under Yale University’s standards, rather than what he described as Harvard’s more lenient system, he would add a course titled “Fixed Income for Dummies.”

Buyback debate continues

Regular buybacks of long-term U.S. Treasuries have attracted attention from crypto-market participants because of their potential effect on liquidity and risk-asset prices. Macro strategist Mark Connors has suggested the mechanism could create more favorable conditions for bitcoin to rise to $180,000, particularly if banking restrictions are eased.

The program’s effectiveness remains disputed. In September 2026, the Treasury bought back about $5.2 billion of bonds, but yields continued to rise as investors priced in inflation risks, the budget deficit and the outlook for Federal Reserve monetary policy.

American economist Peter Schiff warned that rising Treasury yields despite efforts to support the market may indicate deepening U.S. debt problems. Bessent’s defense of the program came as debate continued over its effectiveness and impact on financial markets.

Source: Incrypted