U.S. Treasury Secretary Scott Bessent signals potential expansion of bond buyback program

Hello, this is Leonie Kidd coming to you from London.

It feels right to quote the famous 1993 quote from political stategist James Carville: "I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a .400 baseball hitter. But now I would want to come back as the bond market. You can intimidate everybody."

The "Bessent Bid" proved to be short-lived and it seems the bond market will need more convincing.

Read on!

What you need to know today

U.S. Treasury Secretary Scott Bessent has told CNBC in an exclusive interview on Thursday that the Treasury could expand its bond buyback operation beyond the initial $4 billion. Speaking to CNBC's Sara Eisen, he said current yields don't reflect market fundamentals, adding that liquidity — particularly in the 30-year bond — is weak.

His remarks prompted a brief easing in yields, but the "Bessent Bid" was short-lived. The bond market resumed its march higher towards multi-decade peaks for the long-dated 30-year bond. Analysts were swift to point out the flaws, with Evercore ISI saying the move will have "little enduring impact and could backfire," Jefferies called it a "hastily made decision," while JPMorgan said in a client note that the "more lasting impact is the potential for higher risk premia."

Speaking on Squawk Box Asia on Friday, JPMorgan's James Sullivan described the action as "a little bit like paying your mortgage with your credit card. It can work for a while, but eventually the mismatch starts to become more obvious."

There's skepticism around the impact of Bessent's "big toolkit." Here's what else he can try.

"We can grow out of that"

Bessent also said that there's a "very good chance" the U.S. has seen its budget deficit peak under President Donald Trump. Data showed it topped $432 billion in July. He also hit back at critics of America's ballooning debt pile, which hit $40 trillion for the first time on Tuesday, saying there is "nothing magic" about that number, adding: "We can grow our way out of that."

You can watch the full exclusive interview here.

Market wrap

Wall Street pulled back during Thursday's session. The S&P 500 and Nasdaq Composite dropped 0.9% and 1%, respectively. That retreat left the S&P 500 down 1.9% for the week, and the Nasdaq off by 2.5% — putting them on pace to snap a three-week winning streak. The Dow Jones Industrial Average has fallen 1.8% week to date, on track for back-to-back weekly losses. Futures are pointing to a muted open on Friday.

Across Asia-Pacific, it's been a mixed session during the final trading day of the week, while muted gains for European stocks look set to leave the major equity markets in the red for the week.

— Leonie Kidd

And Finally...

Chinese humanoid robots’ biggest obstacle: humans are still (mostly) better

BEIJING — The big challenge for humanoid robots is still getting the technology to work well, according to industry leaders speaking at the World Robot Conference in Beijing this week.

Robots are not yet as efficient as humans, and take time to learn new skills, creating a bottleneck for the industry, Unitree's founder Wang Xingxing said, addressing the conference one day after his company's 460% IPO-day surge. His remarks underscored the challenges for humanoid robots entering the human workforce.

— Evelyn Cheng