Bond markets

It was the kind of line that Robert De Niro would deliver perfectly in a gangster epic. “I am the house now,” the United States Treasury Secretary Scott Bessent declared confidently last week. “And you can bet against me if you want.” It was the most aggressive attempt yet by the most powerful financial official in the world to take on and tame the traders of Wall Street. With major interventions underway to control the yen-dollar exchange rate, and the yields on America’s $40 trillion national debt, Bessent’s message was clear. They will lose money if they dare to defy his will. Well, perhaps they will in the short term. With a background at the world’s most successful hedge fund, Bessent knows more about the market than most people. There is just one snag.

Donald Trump has spent much of his second term probing the limits of presidential power. This week, he has discovered another means by which to test them: by promising every American adult $5,000 in the event Republicans retain both houses of Congress. The proposal would cost around $1.2 trillion: representing around 3 percent of America’s $40 trillion in national debt. Washington is likely to reject the idea, but even if they approve it, there is one constituency who is likely to ensure that it remains untenable. That constituency would be the people and institutions expected to lend the United States money. As a deficit mushrooms to a projected $1.9 trillion, there is still little appetite in Washington for any sort of fiscal course correction.