- Key insight: The Treasury Department has hired longtime Wall Street strategist David Zervos, who has publicly argued for lower interest rates and supported the department's efforts to buy back longer-term Treasury debt, as a counselor to Treasury Secretary Scott Bessent.
- Supporting data: Treasury plans to buy up to $6 billion of older 10- and 20-year Treasury securities.
- Forward look: Zervos joins Treasury as the department is fighting against elevated long-term yields, concerns about government debt and lingering questions over the boundary between monetary policy and debt management.
The Department of the Treasury Monday announced economist and Wall Street strategist David Zervos as a counselor in Secretary Scott Bessent's office.
Zervos, who was most recently chief market strategist at Jefferies LLC, also spent time as an advisor in the Federal Reserve Board's Division of Monetary Affairs in addition to being a contributor on CNBC.
"Zervos brings 35 years of experience across global financial markets, central banking, and macroeconomic analysis," Treasury said in a release Monday morning, noting that in his prior roles "he regularly advised leading money managers, banks, hedge funds, pension funds, and sovereign wealth funds around the world."
Zervos has argued that Federal Reserve monetary policy has become overly restrictive, saying that keeping interest rates high and the Fed balance sheet small has restrained the economy. He has called for rates to move toward a lower, more neutral level and has warned about unnecessarily weakening demand and the labor market.
Zervos' hiring comes as the yield on long-dated Treasury bonds has
When Bessent was asked about his role as the "chief bond salesman of the United States" and the purpose of Treasury's
"As bonds become older, they become what's called off-the-run; they are less liquid, and bondholders can get less margin for them," Bessent said. "They're less inclined to hold them, the spreads are wider, so we come in and we make a market. We buy those."
The Treasury's moves in the bond market are also
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Zervos has publicly voiced support for Bessent's move to increase buybacks of longer-term Treasury debt and has pushed back on skepticism of the department's actions to ease long-term bond yields.
"I think [the buybacks are] a tactical move that we've seen conducted many times in the past, these are basically operation twists, and they've been hugely successful when the Fed has initiated them," Zervos told CNBC in August. "They're somewhat more unusual when the Treasury initiates them, but I don't see how you could fight this when the firepower and the cards are all sitting in the Treasury Department, so we'll see.
"I think people are getting a little hot and bothered with the $40 trillion deficit numbers and throwing out the fact that there's more spending coming, particularly vis-a-vis the war," Zervos continued. "This was an opportune moment to kind of put a little bit of a kibosh on the potential for a runaway through the top end of that range."
