Trump sticks with Biden-era Activist Treasury Issuance despite past criticisms

Trump is sticking with the debt strategy Republicans hated under Biden—and even thinking about going further with it.

According to a report by Nouriel Roubini in the Financial Times on Thursday, the White House in 2025 is still using a controversial tactic called Activist Treasury Issuance.

Under this approach, the US Treasury Department is cutting down the amount of long-term debt it sells and instead pushing out more short-term bonds to keep long-term interest rates under control.

This method, first deployed during Joe Biden’s presidency, was criticized heavily at the time. The main worry was that it blurred the lines between what the Federal Reserve should handle and what the Treasury should stay out of.

Bessent warns of deeper intervention if markets get rough

The idea behind ATI is pretty simple. If you want to stop long-term yields from rising, just don’t issue a lot of long-term bonds. That’s exactly what Biden’s Treasury did, and now Trump is keeping the playbook.

Stephen Miran, now chair of Trump’s Council of Economic Advisers, co-wrote a paper last year calling ATI a “fiscal invasion of monetary policy.” He said the Treasury was copying “Operation Twist,” but with its own spin—just issuing less long-term debt rather than relying on the Fed to manipulate bond markets.

Back then, Scott Bessent, who’s now Treasury Secretary, agreed with Miran and said ATI was overstepping. But now, Bessent isn’t just defending the policy—he’s already warning about what comes next. He said that if financial markets “become disorderly,” the Treasury could go beyond ATI and start buying back long-term bonds outright, a direct move to cap rising yields.

That would be a whole new level of fiscal involvement in bond markets—something close to quantitative easing, but led by the Treasury instead of the central bank. In this plan, Washington wouldn’t just be deciding what to issue—it would be actively reshaping the market by removing supply.

Other countries are now copying the strategy

ATI isn’t staying in Washington. It’s spreading globally. In Japan, long-term interest rates are rising fast. The 10-year bond yield jumped from negative territory before 2022 to about 1.6% now. That happened as the Bank of Japan started lifting policy rates and letting go of its previous ultra-loose monetary stance.

With public debt close to 250% of GDP, Tokyo can’t afford another full-blown QE cycle unless there’s a severe economic downturn.

So now, the Japanese Ministry of Finance is reportedly preparing its own version of ATI. The plan? Reduce long-term bond issuance and float more short-term debt, exactly like the US did. And just like that, Miran’s prediction is unfolding.

Governments that adopt ATI once don’t walk away from it. They either stick with it—or double down, just like the current Treasury is doing now.

Not everyone can go this route, though. The eurozone isn’t a likely candidate. There’s no central fiscal body that can issue massive joint debt, and the European Central Bank already has emergency tools in place to control rising spreads if things get bad.

But the UK might be next. With unstable public finances, Britain could easily end up copying ATI to dodge the cost of rising long-term borrowing.

The bigger issue is what all this means for central banks. Inflation is still too high in the US, Japan, and the UK, and governments are piling on debt and pushing policies like ATI that lower borrowing costs artificially, which of course creates a dangerous clash.

Economists have called it a game of chicken, and the more governments go rogue with policies like ATI, the more it looks like central banks are losing that game.

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