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Bessent Pushes Fed Repo Expansion to Ease Dollar Funding

8/13/2026

Summary

Bessent Flags Shift

U.S. Treasury Secretary Scott Bessent said the economy shifted from a K to a C shape.
Scott Bessent cited BLS data that 25th-percentile earnings rose 5.5 % in Q2 2026 versus 1.5 % for the 75th-percentile, while prices rose 3.9 % cutting purchasing power.
Moody’s Analytics chief economist Mark Zandi said the K-shaped divide persists and Mark Matthews of the National Retail Federation warned that soft wages and inflation could curb lower-income spending in 2026.

Summary

Bessent Expands Repo

Treasury Secretary Scott Bessent coordinated with Japan and pushed to expand the Federal Reserve (Fed)'s Foreign and International Monetary Authorities repo facility, giving foreign central banks dollar funding without forcing Treasury sales.
The repo would let foreign banks raise dollars against U.S. Treasury holdings, easing yield pressure if Japan dumped securities.
Analysts warn the added liquidity could clash with the Fed's goal of tight monetary conditions, creating a trade-off.

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Bessent Flags Shift

U.S. Treasury Secretary Scott Bessent said the economy shifted from a K to a C shape.
Scott Bessent cited BLS data that 25th-percentile earnings rose 5.5 % in Q2 2026 versus 1.5 % for the 75th-percentile, while prices rose 3.9 % cutting purchasing power.
Moody’s Analytics chief economist Mark Zandi said the K-shaped divide persists and Mark Matthews of the National Retail Federation warned that soft wages and inflation could curb lower-income spending in 2026.

1 / 2