Remarks by Secretary of the Treasury Scott Bessent before the Treasury Market Conference

"Parallel Prosperity: Strengthening the Treasury Market to Build America's Golden Age"

Secretary Scott Bessent

Treasury Market Conference

November 12, 2025

Introduction

Good morning. It's an honor to be here.

To begin, I would like to thank the New York Fed for hosting this meeting and for inviting me to join you.

It's fitting that the Treasury Market Conference is held each year in the fall. Late fall offers us the opportunity both to look back and to look forward. And since the fall of last year, much has changed.

November 2024 marked an inflection point for the nation and its fiscal future. The American people had just elected President Trump to put the country on stronger financial footing. The previous Administration had run up the highest deficit in US history outside of a recession or wartime. As a result, inflation had skyrocketed to generational highs. Families watched their hard-earned savings melt away as prices of consumer goods climbed ever higher. Seeking a course correction, voters elected President Trump in a landslide. And they gave him a clear mandate: to Make America Affordable Again.

My commitment to that cause-to improving affordability and putting our fiscal house in order-is what motivated me to come out from behind my desk in the private sector to enter public service.

Treasury Markets as a Barometer for Affordability

As the 79^th Treasury Secretary, my duty is to serve as the primary caretaker of the Treasury market. Maintaining a robust Treasury market-and strengthening it even further-is essential to Making America Affordable Again. That's because Treasury yields set the global risk-free rate. Domestically, the risk-free rate sets the pricing for everything else: from bank loans and home mortgages to stocks and corporate bonds.

In that sense, Treasuries are not only the bedrock of the global financial system but also the American Dream. Treasury yields have a trickle-down effect on the broader economy that determines whether a young family can afford a home, a college student can buy a car, or an entrepreneur can get a small business loan. The work we do here directly impacts affordability and quality of life out there. Which is why we must succeed.

The good news is, we are succeeding. The US Treasury market is more robust and more liquid than it's ever been. The Treasury Department has made significant progress in increasing demand and expanding accessibility to US debt. And we are poised to make even more progress towards this goal in the months to come.

The purpose of my remarks this morning is twofold: First, to highlight the breadth, depth, and enduring importance of the US Treasury market; and second, to outline the strategies we are using to keep it that way.

The State of the Treasury Market

As Treasury Secretary, my job is to be the nation's top bond salesman. And Treasury yields are a strong barometer for measuring success in this endeavor.

By this metric, we are making substantial progress in keeping rates down following the spending blowout from the Biden years. In fact, the US Treasury market has been the best-performing developed bond market this year.

The Treasury market's total returns year to date are 6 percent-its best year since 2020. The US 10-year term premium is basically unchanged while US borrowing costs across all other areas of the curve, from 2-year notes all the way to 30-year bonds, are down year to date.

Lower Treasury borrowing costs mean lower corporate borrowing costs, lower mortgage rates, and lower car payments-which all translates to greater affordability for all Americans.

Other developed bond markets, by contrast, have had nowhere near the same success. Some countries have seen demand for their debt reduced or even dry up, especially at the long end. And they have had to react by curtailing sales. But not the United States. We continue to see robust demand at Treasury auctions from a wide range of investors, including foreign investors whose holdings of Treasury securities are at record levels.

This impressive performance comes in spite of the negative rhetoric and doomsaying of market pundits, especially this spring. For the past ten months, the press has been pushing a "Sell America" narrative. But the data and the price action have been saying the opposite: "Buy America." And the market always rewards those who put fundamentals over fear.

Suffice it to say, the Treasury market remains the deepest and most liquid market in the world-which is a testament to the efficacy of the Trump Administration's economic policies.

Investors around the globe trust the Treasury market because of its utility as a safe, liquid, and reliable store of value. Treasury securities are used for a wide variety of purposes in the financial system, including: as a vehicle to finance the US government; as a means for the Fed to implement monetary policy; as an asset for global investors; as high-quality collateral for a range of different transactions and institutions; and as a reference benchmark for a wide variety of other borrowers.

Daily trading volume for US Treasuries averages around $1 trillion per day-and that is just in the cash securities. Volumes in associated derivatives represent another major source of liquidity.

During periods of market volatility, volumes in the Treasury market increase substantially. When markets continue to facilitate effective risk transfer, despite unexpected events, that is a sign of things working. Having traded many different markets across the world throughout my career, it is moments when markets stop trading that most concern me.

Strategies to Strengthen Treasury Markets

It is impossible to eliminate market volatility altogether. That's why our goal must be to ensure a robust and resilient market that can withstand volatility when it inevitably arrives. To that end, Treasury is pushing several forward-thinking initiatives to strengthen the Treasury market.

This includes the Treasury buyback program, which is an important tool in supporting market liquidity. While the program has been a success so far, we continue to look for ways to improve its efficacy. We have already expanded the size of long-end operations in the Treasury buyback program and will expand the counterparty set in the first half of next year to continue building on the progress we have made.

Treasury is also supportive of reforms to the enhanced supplementary leverage ratio, or eSLR. In its current form, the eSLR risks becoming a consistently binding constraint rather than a backstop to risk-based capital requirements. That can distort banks' incentives to engage in low-risk activities, such as Treasury intermediation. The eSLR must be improved to prevent this distortion.

Expanding central clearing is also key to strengthening markets. The SEC is currently leading an effort to expand central clearing in the Treasury market, which will enhance resilience, expand netting opportunities, and standardize risk management. This effort also supports competition in the marketplace, as several central counterparties are launching new business lines to facilitate the expanded clearing activity.

Maintaining the "Regular and Predictable" Issuance Framework

Demand for US Treasuries remains strong as ever, and these strategies will help us feed that growing demand. But equally important is maintaining Treasury's "Regular and Predictable" issuance framework.

Our guiding principle at the Treasury Department is to finance the government at the least cost over time. The phrase "over time" acknowledges that Treasury issuance decisions are not to be made ad hoc, but rather as part of an overall strategy to accomplish our goals over the long term. And the "Regular and Predictable" issuance framework has proven to be the most effective means of achieving those goals.

Although Treasury has regularly sold Treasury bills for nearly 100 years, it generally sold coupon securities on an ad hoc basis prior to the late 1970s. At that time, the rising federal debt burden rendered the previous ad hoc approach infeasible, and Treasury adopted regular offerings of coupon securities that have continued to this day. Thus was born the "Regular and Predictable" issuance framework.

There are manifold benefits to this framework:

First, "Regular and Predictable" issuance promotes transparency and investor confidence by giving market participants a clear, consistent auction schedule. The single-price auction format further supports strong participation and fair pricing.

Second, by spreading maturities evenly over time, "Regular and Predictable" issuance limits rollover risk and avoids large concentrations of debt coming due at once.

Third, it reduces supply uncertainty and the risk of a market premium that could arise if investors expected sudden shifts in issuance.

Finally, "Regular and Predictable" issuance reinforces Treasury's role in setting the global risk-free rate, providing a reliable reference point for other borrowers and financial products.

To implement this "Regular and Predictable" framework, Treasury sells all its securities at a regular cadence and sizing based on a transparent schedule. And it adjusts coupon issuance gradually over time. Gradual adjustments are more important for these securities because of their duration.

Guiding Principles for "Regular and Predictable" Issuance

Our guiding lights in thinking about appropriate adjustments are durable trends in investor demand and Treasury's assessment of the issuance mix that best achieves its low-cost-borrowing goal. In making these decisions, Treasury stays in close contact with investors, utilizing bilateral engagements with many of you in the room here today. And it solicits the advice of the Treasury Borrowing Advisory Committee and the primary dealers.

When borrowing needs change quickly, bills are our issuance "shock absorber." Because we want nominal coupon securities to adjust gradually, bills play an important role in managing changes in borrowing needs that are seasonal, short-term, or unexpected. Bills also facilitate flexibility, particularly in times of uncertainty and amid quickly evolving changes in demand profile.

Importantly, being "Regular and Predictable" does not mean that Treasury's issuance policy cannot or should not evolve as investor demand changes. If our borrowing outlook changes, so will the amount we issue. And if structural demand for certain products or tenors evolves over time, we will be responsive and adjust how we allocate issuance accordingly.

For example, we are closely monitoring growth in money market funds and the stablecoin market, which are both large investors in Treasury bills. Money market funds are now valued at about $7.5 trillion, having grown by nearly $1 trillion in the last year alone. The stablecoin market, meanwhile, is valued around $300 billion and could grow tenfold by the end of the decade thanks to the innovation made possible by the GENIUS Act. As money market funds and stablecoins grow, so too will the demand for Treasury bills.

In addition to growing demand for Treasury bills from money market funds and stablecoin providers, we are witnessing increased demand from banks as they shake off the excessive oversight that held them back. Since the start of this year, bank portfolios have expanded their Treasury holdings. Additional reforms, including the potential eSLR reform I mentioned earlier, could further accelerate this process. As Treasury watches these trends play out, we will assess whether they are structural or temporary shifts. And we will adjust our long-term issuance plans accordingly.

For Treasury auctions to be successful, we need to be attentive to market participants, but we will not change our overall protocols. We will remain analytical in our decision-making, adjusting issuance gradually to avoid market disruptions. We will provide public forward guidance to the extent practicable. And we will regularly canvass the market for feedback on how our issuance decisions are being received.

Looking Ahead

Now let's look to the year ahead. At Treasury, we have already provided forward guidance that we will likely not need to change coupon auction sizes for at least the next several quarters. Existing financing capacity from current auction sizes and robust demand in the bill market have given us flexibility to manage our upcoming potential borrowing needs.

Recent developments have also given us additional time and flexibility before we need to make any such decisions. These developments include the reduction of the national deficit and the FOMC's announcement that they will start purchasing Treasury bills with proceeds from their MBS holdings.

At the most recent TBAC meeting, the Committee determined that the current issuance mix is "well-positioned to balance a low cost of debt with the low volatility of a productivity boom." While keeping proper risk management in mind, our long-term economic outlook is consistent with an expectation of increased productivity stemming from an additive boost of artificial intelligence, increased investment into the United States, and elevated capital expenditure investment.

As such, we will continue to monitor trends in investor demand. And we will continue to consider where and if additional issuance could best achieve Treasury's debt management goals. When and if the time comes to make changes, we will be prepared, and we will socialize our plans with market participants.

Conclusion

Now allow me to offer a few thoughts in closing.

We are gathered this morning in New York's Financial District, historically the beating heart of global capital. A few blocks south of here is the New York Stock Exchange. While today's venue is Wall Street-or maybe in a few years, Y'all Street in Dallas-my main audience is, and always will be, Main Street.

I answered the call to serve because I wanted to help President Trump usher in a new era of Parallel Prosperity-a decade of economic expansion where Wall Street and Main Street grow together. President Trump's Golden Age stands to benefit Americans on every rung of the economic ladder. And maintaining a strong and robust Treasury market is critical to that goal.

Properly managing our nation's debt is a solemn responsibility that will affect generations of Americans to come. That's why maintaining a healthy Treasury market and strengthening it even further is my foremost responsibility as Treasury Secretary.

Treasury is committed to safeguarding the world's benchmark for stability while ensuring that the American people can borrow, build, and thrive. By keeping the risk-free rate low and the Treasury market strong, we are Making America Affordable Again. And we are ensuring that our nation's prosperity endures far beyond our own time.

Thank you for being our partners in this effort.

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