The treasury secretary’s remarks came a day after yields on ten-year treasuries reached 4.83% — their highest level since October 2023. The Treasury Department has also kicked off a bond-buying spree in an effort to suppress yield increases, which influence interest rates across the U.S. economy including on credit cards, auto loans and mortgages. The Treasury reported buying $5.2 billion in longer-term bonds, less than the $6 billion limit that it had set for itself. The gambit fell flat with investors, and the bond sell-off has continued with little interruption.
Bessent says the U.S. is in good shape
Bond yields are inversely related to bond prices, so a surge in yields signals that traders are demanding a higher return in exchange for buying U.S. bonds. Financial observers attribute the unrest in the bond market to a mix of factors that include inflation from the Iran War, the corporate bond frenzy in the AI buildout and the U.S.’s growing national debt pile.
Bessent argued investors still view Treasury bonds as an attractive financial asset to purchase and pointed to sturdy demand at two auctions recently carried out by the Treasury Department. U.S. bonds are traditionally viewed by investors as rock-solid assets that become more attractive during a stretch of economic uncertainty or an outright crisis.
“We have a supply shock, and we will get to the other side of this,” he said. “We’ve had two very strong Treasury auctions, and the USA is in very good shape.”
‘I am the house now”
Bessent is a former hedge fund manager who built his reputation on a famous 1992 trade against the Bank of England’s futile effort to prop up the pound sterling . He’s been swatting away criticism of the Trump administration’s extraordinary intervention in the bond market. Bessent recently raised eyebrows in financial circles when he adopted a casino metaphor to describe the power he has to dictate the terms of engagement.
“Whenever people say, ‘Oh, well, Treasury Secretary’s taking a risk,’ well, you know, it’s my dream,” he said in remarks delivered at Southern Methodist University on Wednesday. “I have asymmetric information. I am the house now.”
