Scott Biessent, the United States Treasury Secretary, is actively working to reduce Treasury yields, a key priority that aligns with the government’s need for fiscal flexibility.

Rising yields can significantly restrict government spending capabilities, affecting vital areas such as tax cuts and defense spending.

Consequently, managing these yields has become a central task for Biessent.

In recent discourse, there is a growing perception that Biessent wields considerable influence over Treasury yields, particularly long-term bonds.

This perspective has given rise to the phrase "no opposing Biessent's Treasury," a twist on the traditional saying related to the Federal Reserve's influence.

Notably, a recent piece indicated that top strategists at firms such as Barclays, Royal Bank of Canada, and Société Générale have adjusted their forecasts for ten-year Treasury yields downward, attributing part of this adjustment to Biessent’s initiatives.

These strategies include not just verbal commitments but also tangible actions, such as reducing the size of ten-year bond auctions or advocating for regulatory relaxations to boost demand for bonds.

Analysts note that while the Treasury can shift towards issuing more short-term bills and fewer long-term bonds, Biessent had previously criticized this approach as "quantitative easing by other means" during Janet Yellen’s tenure.

However, Biessent is now employing this very strategy.

Jonit Dhingra, head of U.S. interest rate strategy at BNP Paribas, suggests that Biessent might successfully implement this strategy beyond current market expectations.

He posits that there are natural limits to the issuance of Treasury bills; excessive supply could lead to yields surpassing prevailing short-term rates, making Treasury offerings less appealing to taxpayers.

Dhingra speculates that the government could finance itself using these bills until at least late 2026, potentially extending into 2027. He characterizes this long-term strategy as a method to "buy time," banking on future declines in long-term rates due to either falling inflation or improved fiscal conditions.

Biessent could also introduce regulatory incentives encouraging banks to purchase more Treasury bonds.

The supplementary leverage ratio, a key regulatory metric, plays a crucial role here.

This ratio is the quotient of a bank’s common equity tier 1 capital to its total consolidated assets and must exceed a specified threshold that varies depending on the institution's size.

During the COVID-19 pandemic, Treasury securities and central bank reserves were temporarily excluded from this calculation to ease pressures in bond and credit markets.

In 2021, following the end of this exclusion period, the Federal Reserve reviewed potential adjustments to the supplementary leverage ratio, but no changes materialized.

Kelly indicates that current regulatory conditions are conducive to lowering the weight of Treasury securities in the supplementary leverage ratio, enhancing the attractiveness for banks to hold these bonds, which would require them to maintain less capital against them.

This approach can be seen as a form of quantitative easing, although here, the buyers are commercial banks rather than the central bank.

Kelly expresses confidence in the likelihood of such adjustments.

Additionally, Biessent may pressure the Federal Reserve to reinstate quantitative easing policies should a crisis emerge in the Treasury market, although such measures depend on prevailing financial circumstances.

Another unconventional approach available to Biessent involves proposing the establishment of a sovereign wealth fund aimed at purchasing Treasury bonds.

A fixed income chief from a significant asset management firm noted that this concept resembles "money printing to fund government spending," which could potentially undermine the value of the U.S. dollar.

Furthermore, Biessent could advocate for a congressional budget that substantially reduces the deficit, an effective but challenging undertaking.

Analysts suggest that except for deficit reduction, many of Biessent's other strategies may merely serve as temporary solutions to delay rising yields until the fiscal situation stabilizes.

Should the government's financial circumstances remain unchanged, relying on short-term Treasury bills may only postpone deeper issues, likely leading to the issuance of bonds with higher interest rates in the future.

Moreover, unless the influence of Treasury securities on the supplementary leverage ratio is wholly nullified, banks may be hesitant to increase their holdings of Treasury securities without a clearer improvement in the fiscal landscape, thereby limiting prospects for lower future yields.

In other developments, a recent survey of global fund managers released by a financial institution indicated a sharp decline in allocations to U.S. equities and significant drops in growth expectations.

Despite this cautious sentiment, inflows into U.S. equity funds surged by $24 billion last week, marking the largest weekly increase in 2025. Analysis of the four-week moving average of these inflows suggests a clear upward trend.

Market strategists caution that while strong inflows might appear optimistic, they reflect a lack of actual selling activity among global investors concerning U.S. equities, as indicated by a strategist from the same financial institution.