Bessent dismisses jobs data noise as deficit hits $1.8 trillion

Treasury Secretary Scott Bessent said US employment data carries "considerable noise" and that Trump's immigration crackdown has lowered the number of jobs the economy needs, a signal that may reshape how markets interpret payrolls.

"He's activist, absolutely," Mark Sobel, a former US Treasury official now at the research group OMFIF, said. "It harkens back to his hedge-fund background."

The comments come as the Treasury's fiscal position deteriorates. The deficit for fiscal 2026 stands at $1.8 trillion, 5% wider than last year, with spending driven by Social Security, Medicare, Medicaid and interest on the debt. Ten-year Treasury yields have risen above levels seen before Trump returned to office, keeping mortgage rates elevated and posing a headwind to economic growth months before the November congressional election.

Bessent's remarks could lead markets to question the reliability of employment data, potentially affecting Federal Reserve rate expectations and bond yields. With two months left in the fiscal year and Republicans exploring additional tax cuts, the administration's ability to manage both the labor market narrative and the deficit will be tested.

Interventionist Turn

Bessent's comments on jobs data are the latest in a series of unconventional moves. Just two weeks after releasing its schedule for buying back older Treasury securities, the Treasury announced it would "at least double" its planned purchases of outstanding 10-year to 30-year debt. Earlier this month, the department opened the door to potential cuts in issuance of longer-dated debt. On July 31, Bessent oversaw the first purchases of yen by US authorities in three decades, an action seen as reducing the need for Japan to sell down its Treasuries stockpile.

The Treasury has long hewed to the principle of being "regular and predictable" in debt issuance. Bessent endorsed that concept in a keynote speech at a Treasury market conference in November. But he also said "my job is to be the nation's top bond salesman" and highlighted the economic importance of lower Treasury rates.

"It is going against 'regular and predictable' — but that's the world we live in," Gregory Faranello, head of US rates trading and strategy at AmeriVet Securities, said. "The messaging is clear: stop the rise in yields."

Market Reaction and Forward Path

Ten-year yields were down around 6 basis points in afternoon trading Wednesday, while 30-year rates were almost 9 basis points lower. The drop in rates also pushed the Bloomberg Dollar Spot Index to its lowest level in three months.

"Instead of addressing the underlying issue, which is to bring down debt and to run a more modest budget deficit, it's trying to manipulate the yield curve," said Robin Brooks, a senior fellow at the Brookings Institution.

"This only works for so long," said Guy Miller, chief strategist at Zurich Insurance. "It can be quite a potent intervention when you've got the Treasury saying that they're very much committed to doing this. But ultimately, unless you tackle profligate policy, that's not sustainable indefinitely."

The last time a Treasury secretary intervened this aggressively in markets was in the early 2000s, according to Sobel. Historical comparisons to James Baker — who helped engineer the Plaza and Louvre Accords of the 1980s — are complicated by different historical contexts, he said.

For investors, the key question is whether Bessent's dismissal of jobs data noise signals a broader shift in how the administration interprets economic indicators. If the Treasury is willing to discount employment readings, it may also be more willing to pressure the Federal Reserve on rate policy. With the November congressional election approaching and mortgage rates elevated, the stakes for the administration's economic narrative are high.

This article is for informational purposes only and does not constitute investment advice.