US Treasury secretary Scott Bessent’s bond market intervention is pulling in the opposite direction to the Federal Reserve’s battle against inflation, big investors warned ahead of chair Kevin Warsh’s Jackson Hole speech. Wall Street has widely criticised Bessent’s surprise move last week to “at least double” the Treasury’s purchases of long-term US government debt, with investors saying that it could both undermine the agency’s credibility and work against the Fed’s ability to tame this year’s flare-up in inflation. Bessent’s manoeuvre to prop up the $32tn bond market after long-term borrowing costs hit a 19-year high has raised the stakes for Warsh when he addresses the Kansas City Fed’s economic conference in Jackson Hole, Wyoming, on Friday.

Investors and economists have pointed out that the priorities and strategies of the Fed and the finance ministry seem increasingly at odds. Druckenmiller this week called the plan to increase the buyback of long-term Treasuries to at least $4bn a “mistake.”.