- Elon Musk has established the 10-year Treasury yield as an unofficial scorecard for DOGE efforts.
- Musk has previously said Treasury yields will fall if DOGE’s cost-cutting measures are working.
- After an initial post-election surge, yields have fallen lately. But not for the reason DOGE wants.
While Donald Trump has historically looked at the strength of the stock market as a crucial gauge for the health of a presidency, there’s a new key metric in town: the 10-year Treasury yield.
Scott Bessent, Trump’s pick for treasury secretary, identified lowering yields as a main focus for the administration early in his tenure.
DOGE czar Elon Musk has since taken it a step further. Tasked with cutting government costs, Musk has pinpointed the 10-year yield as a scorecard for how the efficiency bureau is doing. Basically, the lower the better. It would mean easier conditions for the average person looking to buy a house or fund a business,
As it becomes clear that @DOGE is working, you will see the long-term Treasury bill yields fall.And all Americans will benefit from lower interest payments on mortgages, small business debt, credit card and other loans.
— Elon Musk (@elonmusk) February 12, 2025
Musk’s thinking is: the market will come around to lower bond yields if DOGE can show that decreased government spending will help the US budget deficit and a swelling national debt burden.
With that in mind, DOGE must be thrilled that the 10-year yield is down nearly 30 basis points over the past six days. Mission accomplished, right?
Not so fast. Market pundits point out that the reason for the decline is instead a suddenly cloudy economic outlook — one ironically being fueled by uncertainty around DOGE.
A shift in narrative
The market’s focus on the possibility of slowing economic growth is a relatively new one. Until recently, weak data would be met with a risk-on reaction, because it improved the odds of faster interest-rate cuts.
Strategists at Morgan Stanley say this relationship flipped last week, as evidenced by a trio of disappointing economic data triggering the stock market’s worst day of 2025. Bond yields also slipped as investors fled to ultra-safe US Treasurys as a haven trade.
“The recent move down … has been driven by weak economic data including slowing Q4 GDP growth, very weak January retail sales and slowing ISM data,” Jay Hatfield, CEO of Infrastructure Capital Advisors, told BI.
The streak of uninspiring data has put a considerable dent into first-quarter economic growth estimates. The Atlanta Federal Reserve’s GDPNow tracker now sees expansion of 2.3% for the period, down from 3.9% in early February.
The DOGE effect
To some high-profile investors and strategists, DOGE fits into this equation not as a driver lower yields, but instead as part of the economic-slowdown story.
“DOGE is off to an aggressive start and this is likely a headwind to growth initially, as Federal spending and headcount is reduced,” Mike Wilson, the CIO and chief US equity strategist at Morgan Stanley, said in a note to clients earlier this week.
Torsten Sløk, chief economist at Apollo, is among those who see any labor-force disruption caused by DOGE rippling through economic data and eventually asset prices.
Sløk estimates that DOGE could eliminate as many as 300,000 federal positions, ultimately translating to nearly one million total job losses.
“Any increase in layoffs will push jobless claims higher over the coming weeks, and such a rise in the unemployment rate is likely to have consequences for rates, equities, and credit,” he said.
