Peter Schiff Calls Out Trump’s ‘Military Option’ To Lower Bond Yields: ‘What the Hell Is He Talking About?’
President Donald Trump’s suggestion that the U.S. military could represent an "ultimate intervention" to lower bond yields has drawn a sharp response from economist and longtime gold-market commentator Peter Schiff.
Trump made the remark during a Fox News interview last week as he discussed efforts by Treasury Secretary Scott Bessent to intervene in the bond market. Schiff questioned how the military could be used to lower interest rates or Treasury yields, noting that Trump did not explain what he meant by the comment.
Schiff Mocks Trump’s ‘Military Option’
Schiff addressed Trump’s comments on his latest podcast, questioning the president’s suggestion that the military could be used as an intervention in the bond market.
"He said there also is a military option to lowering interest rates, getting bond yields down, that if we have to, we’re gonna resort to our military," Schiff said.
"What the hell is he talking about?" he added.
Schiff then sarcastically speculated about what such an intervention could look like.
"Buy these Treasuries or we’re going to bomb you?" Schiff asked.
Schiff’s comments were aimed at the ambiguity of Trump’s statement. Trump did not explain how the U.S. military could be used to influence Treasury yields, and Schiff did not claim that the president had literally proposed using military force against Treasury buyers.
Trump’s original remark came after he was asked about Treasury intervention in the bond market. "We have many types of intervention. That’s one," Trump said. "The ultimate intervention is our military. And if we have to use that, we will." Trump did not elaborate on what he meant by a military intervention.
The comments come as the Trump administration has been increasingly focused on long-term borrowing costs. Bessent has expanded the government’s planned purchases of longer-dated Treasuries, a move aimed at supporting the bond market and influencing the supply of securities available to investors.
Bond Yields Take Center Stage
The Treasury market has become an increasingly important focus for the administration as long-term borrowing costs remain elevated.
Treasury’s intervention involves buying back previously issued securities, particularly longer-dated debt. The strategy can alter the maturity profile of outstanding government debt and potentially put downward pressure on longer-term yields.
Earlier this month, the U.S. Treasury announced that it would increase the size of its liquidity-support buyback operations for longer-dated nominal coupon securities, covering the 10- to 20-year and 20- to 30-year sectors. The maximum size of each operation will rise to at least $4 billion, up from the current $2 billion.
The 30-Year Treasury yield rose two basis points to hover around 5.213% at the time of writing, the 10-Year yield was up five basis points at 4.73%, while the two-year bond yield rose 12 basis points to 4.36%.
Warsh’s Hawkish Tone Puts Rate Hike Back in Focus
At the Jackson Hole Symposium, Federal Reserve Chair Kevin Warsh struck a more hawkish tone on inflation, saying that "price stability is not self-executing" and that it is the Fed’s job to deliver stable prices.
Economists at ING Think noted that Warsh emphasized that inflation remains well above the Fed’s 2% target, the inflation trend has not meaningfully improved and monetary conditions are not restrictive, while also pointing to strong AI-related capital spending, low credit spreads, robust issuance and a stable labor market.
Market pricing for a September rate hike jumped to 54% from 34% before Warsh’s speech, effectively turning the meeting into a "toss of a coin."
ING characterized Warsh’s remarks as "net hawkish overall," while noting that he offered no comments on the fiscal deficit, Bessent’s bond buybacks or the U.S. dollar.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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