Prediction market traders doubtful Bessent's bond interventions will push yields lower

• Kalshi traders place 56% odds that the 10-year Treasury yield will end 2026 at or above 4.75%, compared to current levels around 4.70%, with only 27% probability it exceeds 5%
• Polymarket speculators give two-in-three odds that yields will breach 4.8% at some point in 2026, a level not yet reached despite recent bond sell-offs
• Treasury's announced bond buyback program and potential use of its Treasury General Account initially pushed yields lower, but traders expect the decline to be temporary with yields resuming their upward trajectory

Summary

Treasury Secretary Scott Bessent's efforts to control rising bond yields are facing skepticism from prediction market traders, who believe his interventions will have limited long-term impact.

Key Market Data:

• The 10-year Treasury note yield currently trades around 4.70%
• Kalshi traders assign a 56% probability that yields will end 2026 at or above 4.75%
• Only 27% odds are placed on yields finishing above 5% by year-end
• Polymarket speculators give two-in-three odds that yields will breach 4.8% at some point in 2026—a level not yet reached during the recent sell-off

Market Context:

Bond yields have surged recently due to inflation concerns and unresolved U.S.-Iran conflict. U.S. national debt has crossed a significant threshold, adding further upward pressure on yields.

Government Response:

In response to the bond market sell-off, the Treasury Department announced increased bond buyback programs to stabilize markets. Yields initially fell on the news but subsequently resumed their upward trajectory. On Monday, CNBC reported the Treasury may use its general account to fund expanded buybacks, according to senior officials. However, yields declined only temporarily following this announcement.

Market Implications:

Prediction market traders remain doubtful that these interventions will produce sustained downward pressure on yields. Trading volume on these prediction contracts is relatively low at approximately $16,500, suggesting limited participation. The consensus view indicates expectations for continued yield elevation through 2026, despite Treasury Department efforts.

The contracts on both Kalshi and Polymarket are resolved using official U.S. Treasury data.