Following is the unofficial transcript of a CNBC exclusive interview with U.S. Treasury Secretary Scott Bessent on CNBC's "Squawk on the Street" (M-F, 9AM-12PM ET) today, Thursday, August 20. Following are links to video on CNBC.com: https://www.cnbc.com/video/2026/08/20/watch-cnbcs-full-interview-with-treasury-secretary-scott-bessent.html, https://www.cnbc.com/video/2026/08/20/bessent-says-treasury-buyback-operation-could-be-more-than-4-billion.html, and https://www.cnbc.com/video/2026/08/20/scott-bessent-says-u-s-likely-wont-restart-large-scale-iran-combat-as-it-steps-up-economic-pressure.html.
SARA EISEN: Let's start, though, with this bond move. Yields are rebounding today after the Treasury increased its buyback limit on longer-dated securities yesterday. And joining us now, in a CNBC exclusive interview, to discuss is Treasury Secretary Scott Bessent. Secretary Bessent, welcome back. It's good to see you.
SCOTT BESSENT: Sara, good morning. Good to see you.
EISEN: So, tell, talk us through what you are trying to do here by announcing the increased size of the buybacks.
BESSENT: Yes, the, we're trying to signal that we think that this is a thinly traded area of the market, that we're in August, and there's been a lot of corporate issuance that's influenced the market. And we believe that there are many underlying factors in turn that the market is not looking at, and we are going to make a market the, in these. We routinely do buybacks, and we're going to increase the size of the buyback. And, you know, Sara, I would note that it could be more than the $4 billion per issue.
EISEN: Yes, I was going to ask how big this could get. If the signal here is that you're not happy with the direction of yields, you know, they have gone back the other way. We have erased most of the Treasury rally that you got yesterday with that big surprise. So how much more are you willing to do?
BESSENT: Well, again, we have a big toolkit, so we will see. And part of it is signaling here, and to show that we believe that the yields don't reflect the underlying fundamentals. This Iran conflict, we will get on the other side of this. We don't know when, and we can talk about the economic measures we're going to be taking against Iran in a minute.
BESSENT: We believe that the liquidity, especially in the 30-year point, is very poor. And we are in the administration, we are, be announcing probably at the end of this week, beginning of next week an increased focus on fiscal consolidation. And it's coming from President Trump. Russ Vought and myself will be examining both on the revenue side and the cost side what we can do.
EISEN: Yes, because that's where I was going to go and where a lot of the analysis has focused, as you know, Mr. Secretary, which is strong signal from the administration on the buybacks, but the fundamentals are ultimately what is going to prevail here in the bond market. And the fundamentals are hard to ignore when it comes to the size of our debt, with public debt increasing to now $40 trillion.
BESSENT: Well, yes, I mean, look, Sara, there's nothing magic about the $40 trillion number. And we can grow our way out of that. So, but what we do want to signal is, I think that there's been a lot of misinformation in terms of what's going on with the deficit, what's going on with the deficit to GDP. We actually had a fiscal consolidation for the calendar year 2025. We had, we are at about 5.7 percent of GDP. And one of the things that's temporary here that's influencing the deficit has been these tariff refunds. And we won't have to do that again. And the, Ambassador Greer through the 301 process is reimplementing the same level of tariffs. And I would expect that our 2026 tariff income is going to be roughly what it was in '25, and we're going to be able to keep that in terms of the budget consolidation. The other big item in the budget that we're seeing is the hit that we're taking from, to revenues for the immediate expensing of factories and of equipment and farm structures. And I think that, if people sit back and think, that's not government spending. That is actually an investment in the future and we're increasing the tax base. And that's how, that is what measures the wealth of a nation, is the ability to increase after-tax return on capital. So we're pulling back the, think of it as pulling back the slingshot here. We have a lot of potential energy that will turn into kinetic energy during this year, next year, as these factories come online.
EISEN: So, do you think we have seen peak deficit during this administration?
BESSENT: I think the very, very good chance we have, that we are going to be laser-focused, as I said, OMB Director Vought, myself, the president, that, combined with the vice president's Fraud Task Force, where I think we could save several hundred billion dollars.
EISEN: Yes, I mean, because you know, I mean, the funding needs, I think, are daunting to a lot of folks, the dependence on foreign bondholders, for instance. We saw the intervention in the Japanese yen, and that's erased a lot of the progress there. And so there are kind of all these worries at once about what's going to happen ultimately with these holders of Treasuries.
BESSENT: Well, again, again, people have bad information. I have asymmetric information, so I think that the market should think, well, why would we have joined the Japanese in the intervention at this time? Do we know something the market doesn't know that, in terms of being willing to do you know what I would call a Treasury twist here in terms of the bond market? What do I know that the market doesn't know? So I think the market's probably gotten a little ahead of itself, a lot of people not much to do in August.
EISEN: Well, does it tie Kevin Warsh's hand, your newly instated Fed chairman, who signaled—
BESSENT: Well, why, why would it do that?
EISEN: Well, just, if he does need to raise interest rates because inflation is above target or trim the balance sheet, as he said, that would work against what you guys are trying to do here with long-term rates.
BESSENT: Again, I think that the Treasury and the Fed would work together if there was any change in the balance sheet, and we would adjust to any kind of run-off that they're doing.
EISEN: Got it. And what about on rates? What if they have to raise interest rates? Wouldn't that be problematic?
BESSENT: That has nothing to do with the decision that I announced this week on the buybacks.
EISEN: OK. But inflation, you mentioned oil and Iran. And I do wonder how much, like, it's hard to fight it. Right now, we have Brent back to 94, and that's putting pressure on bonds with yields higher, the inflationary outlook because of oil. I mean, we thought it was going to be temporary, but now we're almost six months out here in this, into this war.
BESSENT: Well, again, the, this is headline inflation. What we're seeing in core inflation, both in goods and services, the, is down, and that's what matters. We're seeing the wage increase, especially in a lot of the hospitality sectors, come down. We are seeing the bottom 25 percent of Americans get good wage increases, but that's being contrasted by the top earners. So the wage inflation has come down and the core inflation is down. We had the biggest decrease in pharma prices I think in history since we have been measuring the sequence. So, like, the underlying factors, other than energy, and there is no, we aren't seeing anything that says that the second-order effects are spilling over into core inflation. As a matter of fact, the, in the past weeks, we are seeing, like, the five-year, five-year, and any inflation markers is telling us that inflation is going to be lower in the future.
EISEN: So you, so that raises the question about what happens next in Iran. And you mentioned, the president last night said that there's more economic pressure coming on Iran. I know you're heavily involved in this in executing this. What can we expect here?
BESSENT: Yes, you're going to expect, I will be holding a press conference on Monday to talk about exactly what we're going to do. And, again, we have asymmetric information, and I'm not sure why oil has popped up on this, because this, for now, for now, and it is at the president's discretion, if we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart. But I would emphasize that is for now. And, look, we do have control of the strait. You would have seen media reports that large amounts of energy are getting out. And I think that we can continue doing that in the southern lane, and that I think oil markets are misinterpreting what this economic pressure means. The economic pressure means that we are going to, all of our allies, and this is going to be the greatest coordinated economic isolation in the history of the world, and we are going to them and saying, you are either with us or against us. You want this murderous regime to end. And if you insist on the doing business with them, either transferring money, buying their oil, doing seaborne ship transport first, then the U.S. Treasury and the U.S. government, they will put its full might and force toward enforcing against you. So it is time for our allies and the rest of the world to make a decision. And we are going to squash the economy of this murderous regime, which that will curtail their ability to project power through their proxies. It will, it will mean that they cannot pay the military. And we have substantial inflation, both food inflation and ordinary inflation, in Iran. And what we have seen, I see lots of reports that said, oh, well, this has never worked. It does work, because we have a combination. It is a one-two punch. We have the blockade, and we are going to have the toughest sanctions in history. And I will tell you, this will work. It worked in Venezuela once we put up the blockade. It is working in Cuba right now. And it is going to work in Iran, and we are going to collapse this regime.
EISEN: Well, does it include China? Because that's the primary economic partner of Iran.
BESSENT: Again, many conversations are best to have in private. And we are confident that everyone wants the strait reopened and for energy prices to come back down. And, Sara, keep in mind that the Chinese get 50 percent, 5-0, of their energy from inside, from the Gulf. So it would do them a big service to get with the program.
EISEN: You know, I just wanted to get your read on the economy, as we see oil prices marching higher again. We have seen tremendous resilience, as you noted, from the consumer, but there are signs that the job market may be cracking a little bit. Got a weak job, job report last month. I'm curious about your assessment and as to how much we can handle all of this.
BESSENT: Yes, I think the jobs numbers are quite noisy. And, again, Sara, the other thing that's important too is, like, the jobs that we're seeing are going to Americans. After the deportations that we have seen during President Trump's administration and the closing of the border, that, like, this unfettered migration, we don't need to produce as many jobs. And what's really important here is, we are seeing a manufacturing renaissance, and that has shown. We're seeing construction jobs pick up, and that is morphing into manufacturing jobs. You know, some of these numbers, the manufacturing construction numbers are the highest they have been in 15 years, and that is a combination of the president's trade policy, tax policy, and energy policy.
EISEN: Yes, I mean, I think, also, just to follow up on what you were teasing in terms of an announcement with OMB about the debt, I mean, that seems like it could be a very big deal. Is there anything more you can tell us about what OMB's role would be here and the signal that you're trying to send for the markets?
BESSENT: Well, Sara, what I can tell you is that Director Vought, who had the same position in the president's first term, knows more about the intricacies of the budget, the, where we can cut back, where a lot of these programs that are being given to the states and the money's being frittered away, where we can cut. And I think it's going to be a very exciting couple weeks, a couple of months, as we put this together.
EISEN: You know, the dollar is weakening also. I wanted to ask you about this. We have talked about the dollar together in the past. And it weakened sharply yesterday as well. And I wonder if you see that as a risk here also in making it, making it harder to sort of control the long end of yields, I mean, if that could be inflationary, could be problematic.
BESSENT: No, Sara, it's not really. The U.S. is a big service economy. We don't respond to the trade-weighted dollar. The dollar's been very, very stable, our largest trading partners, Canada and Mexico. And, again, the dollar had had a big run. Now it's going back to where it was a couple months ago. But in terms of the inflation expectations, actually, it went down.
EISEN: Got it, so not concerned about that. Finally, we—
BESSENT: No. Again, we continue to have a strong dollar policy. And the strong dollar policy is that the U.S. economy is pulling away from the rest of the world. When I look, we have 6—
BESSENT: 6.5 percent nominal growth. And the composition of that growth, as the headline inflation comes down, and the Atlanta GDP now number is 4 percent for this quarter. That's a very noisy number, so don't quote me on that. But everything we're seeing in terms of revenue growth at companies, up about 12 percent, so the underlying economy, I think, is very strong. And the only inflationary impulses that we're seeing are coming from the energy, which is temporary.
EISEN: I'm so glad you mentioned growth, because I know that that's on the top of your agenda. You're hosting G20 finance ministers and central bankers the week after next. I will be there because I think this is a very big deal, the emphasis on economic growth. I'm curious if you can give us a little teaser about what we can expect and what your agenda is, because it feels different than, I was looking at some of the agendas back in 2025. Climate was right up there. Back in 2024, financial inclusion was up there. It feels like it has a different vibe this year.
BESSENT: Well, we do. And I will tell you that I didn't attend any of the G20 in South Africa because it did seem kind of a bit off message and we want to bring the G20 back to its core mission. And that core mission is talking about what can econ – what can countries do, economies do, how can we band together to have better global growth. And our message to our allies, our trading partners, is that global growth is the way to take care of this mountain of debt. You know, as the U.S. growth has picked up, over time, we will be well above the CBO trend average than – you know, we were encouraging the rest of the world to do this too. We – I'm pulling for Europe, but they need to follow the Draghi report. They have – they're mired in regulation and kind of intra-European – it's almost the equivalent of this burden that they have put on themselves. And we think the rest of the world should kind of unshackle themselves both on the energy side, on the regulatory side – a huge amount is on the regulatory side. And we want the world to grow. We think the biggest threat to financial stability with this mound of debt that was piled up during the COVID era is a lack of growth. So, we are really pushing an American growth agenda for the rest of the world. We want the rest of the world to come along with us. And it's going to be in a beautiful spot, Asheville, North Carolina, the Blue Ridge Mountains. Asheville's the comeback city after the terrible Hurricane Helene two years ago.
EISEN: Yes, I mean, growth solves a lot of problems, Secretary Bessent. Finally, I just – the big headline is going to be, of course, on the big bond announcement. So I just – you indicated at the top of the interview that you are willing to go bigger and do more if the market doesn't cooperate. How far are you willing to go?
BESSENT: Well, again, it's not if the market cooperates. It's we will see what the conditions are, and we will analyze them then. But I am confident that once the market sees through and looks at the fundamentals – all we're trying to do is get people to focus on the fundamentals and not trade the headlines during a quiet period in a thin market. So, we are trying to keep the market in equilibrium. And we are also seeing big corporate issuance. And a lot of that corporate issuance, I would say, is almost yield-agnostic, because the build-out for A.I., the returns on that, the companies believe they're going to be so high. They don't really care what they're paying. I actually think it's interesting that they're issuing such long-term debt. If I were sitting in the chief financial officer's seat, I would think about issuing more what's called the belly debt, kind of five-year debt, because, look, if we're going to see this incredible productivity growth from A.I., that will naturally disinflate rates. So, the thing that they are building is going to cause disinflation. It is causing a short-term competition for capital, but it is going to – we're going to see real productivity growth. We have been – I think the CBO projections, which are always wrong, are in the one's. Post-World War II has been about 2.1. And I don't see why our productivity growth couldn't be 2.5 or 3 percent. And that is what will create the economic growth and the disinflation.
EISEN: Well, Secretary Bessent, we certainly appreciate the opportunity to ask some of these questions that we know that investors are asking and wondering about. So, thank you for coming on and clarifying.
BESSENT: Good. Good. Sara, thank you. Good to be with you.
EISEN: Yes, good to have you, as always. That is the Treasury Secretary, Scott Bessent, joining us from outside the White House with a lot of information there, I thought, and a lot of news.