[Insight & Opinion] "The Greenspan Put Was a Remedy, Today’s Puts Are the Bill"

A Warning from the Financial Markets Without a Savior

The End of the "Era of the Put" That Once Reassured Investors

Long-term Rates in South Korea and Japan Are Also Rattled

Time to Confront the "Bill for Excessive Debt"

There are several kinds of "puts" in the financial market. In derivative terms, a put refers to the right to sell an asset at a specified price. However, the market has interpreted this word differently over time. Investors' belief that the authorities will step in to prevent a market decline has also come to be known as a "put."

The most famous example is the "Greenspan Put." This originated in 1987, right after the "Black Monday" crash, when then Federal Reserve (Fed) Chair Alan Greenspan quickly slashed interest rates and supplied liquidity, helping to calm the market. Since then, whenever the stock market wavered, the expectation that the Fed would intervene became almost an official doctrine, and the phenomenon was subsequently known as the "Bernanke Put" and "Yellen Put," with only the name changing.

So, which "put" is trending these days? On the night of September 9 (local time), the U.S. Treasury's new Treasury bond purchase policy was implemented. Targeting long-term Treasury bonds with maturities of at least 10 years, this policy triples the amount purchased per session from 2 billion dollars to at least 6 billion dollars. This measure will be in effect until November 4. Since Secretary of the Treasury Scott Bessent unveiled this plan on August 19, it has been dubbed the "Bessent Put." It is essentially the Treasury Secretary's version of the long-standing hope that friendly presidential remarks would boost stock prices—the so-called "Trump Put."

Scott Bessent, U.S. Secretary of the Treasury, is arriving at Incheon International Airport on May 13, 2026. Photo by Dongjoo Yoon

On the very day last month (August 19) that Secretary Bessent announced his expansion plan, the yield on 30-year Treasury bonds briefly dropped by 9 basis points (1 bp = 0.01 percentage points), falling to around 5.2%. However, most of that decline was erased the same day. The day prior, on August 18, 30-year yields had surged above 5.3%, reaching their highest level in 19 years since 2007. On the following day after the announcement, Secretary Bessent appeared on the U.S. broadcaster CNBC, emphasizing that each purchase could exceed 4 billion dollars, and added "there are plenty of policy tools," in a further attempt to calm the market. He also explained that the aim was "to send a signal that rates are not accurately reflecting underlying economic conditions." Lori Heinel, Chief Investment Officer at State Street Investment Management, dismissed the move, saying, "It's a drop in the bucket compared to the other pressures on yields." Coincidentally, Secretary Bessent’s follow-up remarks came just one day after total U.S. public debt surpassed 40 trillion dollars for the first time.

Tracing the root of the damage brings up yet another "put"—the Trump administration’s "Stargate Project," which sought to attract 500 billion dollars in private capital over four years. As both the government and big tech companies scrambled to secure long-term funding at the same time, "crowding-out effects" occurred, with Treasuries and corporate bonds competing for the same investors' wallets. Buoyed by the belief that AI infrastructure investments would reap huge returns, companies issued more corporate bonds despite high interest rates, leaving Treasuries with no choice but to offer even higher yields to attract money. In this way, the AI investment boom triggered by the Trump Put has returned in the form of a bill for higher borrowing costs for the government. Additional factors, such as uncertainty surrounding the new Fed chair's monetary policy direction and inflation concerns emerging from Middle East events, have further driven up long-term yields.

The bill has crossed the Pacific and reached Japan. The expansionary fiscal policy of Japanese Prime Minister Sanae Takaichi’s government is also pushing up long-term Japanese bond yields. For the first time ever, yields on 40-year bonds surpassed 4% earlier this year, and 10-year yields have recently risen to their highest levels since the mid-1990s. In both the U.S. and Japan, policies intended to boost the economy via expanded fiscal spending are paradoxically raising the very government bond yields that finance such spending. Considering that Japan has long been the largest foreign holder of U.S. Treasuries, the rise in Japanese long-term yields raises concerns that Japanese funds may flow back into domestic bonds, weakening demand for U.S. Treasuries further. Korea is not immune to this trend either. Over the past year, yields on Korea’s 10-year government bonds have risen noticeably, and the country is feeling the full impact from the global surge in long-term yields. The fact that both Japan and Korea—long-time major buyers of U.S. Treasuries—are now facing diminishing domestic bond attractiveness is part of the same narrative.

There is a crucial difference between the Greenspan Put and today’s puts. The Greenspan Put involved the central bank injecting liquidity to soothe market fears. In contrast, the Trump Put, Bessent Put, and Takaichi Put are patchwork solutions addressing the side effects of already excessive fiscal expansion and debt. While previous "puts" provided reassurance for the market, today’s puts resemble a mounting bill stemming from those past remedies. Policymakers are slapping on bandaids, but the real wounds continue to fester underneath, as the bond market keeps peering through the surface. The more a particular "put" becomes a trend, the larger the bill piling up behind its name becomes—a fact worth remembering. Perhaps that's why, after the Jackson Hole meeting last month, this remark made the rounds: "Kevin Warsh Just Killed the Fed Put?" The suggestion is that Kevin Warsh intentionally dismantled the long-standing investor expectation that “the Fed will step in to save the market when it falters.” But is that really the case?

Wonkyung Cho, Professor of Economics at Sejong University

This content was produced with the assistance of AI translation services.