Bonds sharply sold off and stocks tumbled on Wednesday after Treasury Secretary Scott Bessent’s attempt to calm what he called market “fever” backfired. At 11 a.m. ET, the Treasury Department announced it would repurchase $6 billion worth of 10- to 20-year government bonds. The goal was to reduce the supply of bonds on the market, which could increase demand and lower interest rates, or yields. However, the opposite occurred—most Treasury yields jumped significantly. The 10-year bond yield surged to as high as 4.85%, its highest level since November 2023, while the 20- and 30-year yields reached as high as 5.3%. When bond prices fall, their yields rise, which often signals investors are less confident about future economic stability. The market reaction was felt across major stock indices. The Nasdaq Composite, which tracks many high-tech companies, dropped 0.8% at midday, while the S&P 500 fell 0.6%. This response highlights the challenges Bessent faces in influencing financial markets, especially as the Trump administration appears to be running out of effective tools to manage key economic factors like bond yields, gas prices, and trade policies. Yields have been rising since the start of the year, but the pace quickened in late July when Kevin Warsh, Trump’s newly appointed Federal Reserve chairman, gave a press conference that did not clearly signal the Fed’s commitment to controlling inflation. This uncertainty, combined with ongoing tensions in the Iran war and higher import costs from Trump’s trade policies, contributed to rising inflation fears. Bessent has described the recent rise in bond yields as a kind of “fever” fueled by media narratives rather than economic fundamentals. In a recent interview with Breitbart, he said his goal was to shift the focus back to facts and push the market toward equilibrium. However, investors and economists have warned that the government’s attempts to control yields could lead to further market tests. Legendary investor Stanley Druckenmiller previously warned in a Wall Street Journal op-ed that if the market believes the Treasury is trying to defend bond prices, every rise in yields would become a challenge to the government’s resolve. This concern was echoed by Peter Boockvar, a chief investment officer, who noted that the market would continue to test this resolve if economic conditions justify it. Many investors believe the fundamentals do justify rising yields, given the U.S. national debt has recently surpassed $40 trillion—a record high. This has drawn attention to the country’s reliance on global investors to purchase its debt. Diane Swonk, a top economist, noted that global sovereign debt has grown dramatically, creating competition for a limited pool of buyers. Bessent has acknowledged these concerns, mentioning work on a “fiscal consolidation package” with the White House, though details remain unclear. Earlier this week, however, Bessent expressed confidence in the U.S. bond market, stating it has been the best-performing market globally since Trump took office. He argued that if investors were worried about a U.S. default, they would be buying bonds from other countries like Germany or Japan instead of U.S. bonds.