Speaking in an interview with CNBC, US Treasury Secretary Scott Bessent said the Treasury could expand its bond buyback operations beyond the currently announced $4 billion level. He said part of the program is intended as a signal to markets that elevated Treasury yields do not accurately reflect underlying economic fundamentals. The Treasury has run regular buyback operations since launching them in 2024 as a liquidity-support tool, repurchasing older, off-the-run securities to keep trading conditions smooth in the world's largest government bond market. Unlike Federal Reserve asset purchases, the operations are funded by issuing new debt rather than expanding the money supply.

Bessent said markets may have "got a little ahead of themselves" and reiterated that rising yields were not the driving force behind the buyback decision. He added that the Treasury would adapt to any future changes in the Federal Reserve's balance sheet policy and would work closely with the Fed if adjustments to bond runoff plans became necessary. The Fed has been allowing Treasuries to mature off its balance sheet since 2022 and has gradually slowed the pace of that runoff as bank reserves move closer to levels officials consider ample. "Rates have nothing to do with the buyback decision," he said, adding that officials would watch bond market conditions and decide whether more action is needed.

He said the Treasury is trying to keep the market in equilibrium and wants to show that yields do not reflect fundamentals. Bessent also said the administration is likely to announce a greater focus on fiscal consolidation, adding that there is "nothing magic" about the US debt surpassing $40 trillion. He said tariff revenue in 2026 is expected to be similar to 2025 levels and that there is a "very good chance" the federal deficit has already peaked. The Treasury typically sets the size of its buyback operations through its quarterly refunding process, making those announcements the next formal checkpoint for whether the program expands beyond $4 billion.

On the Federal Reserve, Bessent said the Treasury and the Fed would work together if there were any change in the central bank's balance sheet. He also said the Treasury would adjust to any kind of Fed bond runoff.

Turning to Iran, Bessent said he will hold a press conference on Monday to discuss actions. He said "maximum economic pressure" should not be interpreted as a return to kinetic military action, arguing that oil markets are misreading the administration's intent. The phrase echoes the sanctions-heavy approach of President Donald Trump's first term, when Washington reimposed sweeping sanctions after withdrawing from the 2015 Iran nuclear deal. Instead, he said the US will pursue coordinated economic isolation of Iran and enforce actions against countries that insist on doing business with Tehran.

Bessent said the measures would curtail Iran's ability to act through proxies and described the coming steps as "the toughest sanctions in history." He said, "We are going to collapse this regime."

When asked whether Iran-related actions would include China, Bessent said "some conversations better to be private." He added that he is confident everyone, including China, wants to see the Strait of Hormuz reopened. The strait, at the mouth of the Persian Gulf, is the world's most important oil chokepoint, with roughly a fifth of globally traded oil passing through it.

In a brief market commentary, the Treasury secretary said the US wants to show that long-dated yields do not reflect underlying fundamentals. The Treasury's bond-market intervention is reviving the "debasement trade" as inflation expectations rise and long-term nominal yields remain suppressed. The trade reflects bets that fiscal deficits and inflation will erode the dollar's purchasing power, a theme investors have expressed this year through record gold prices.