US Treasury Secretary Scott Bessenet Cites Global Issues as Cause for Sharp Rise in US Bond Yields

US Treasury Secretary Scott Bessenet has cited global issues as the primary cause behind the recent sharp increase in US Treasury bond yields. On Monday (local time), before testifying at a House Financial Services Committee hearing, Bessenet told reporters that the surge was due to 'global issues,' according to Reuters.

On this day, the 10-year US Treasury yield surpassed 5%, reaching its highest level since 2007. Bond yields in major countries also rose in tandem, continuing a global sell-off in bond markets. Market analysts point to factors such as oil supply disruptions in the Middle East driving up international oil prices, expectations of a Federal Reserve rate hike, increased demand for capital due to AI investment expansion, and concerns over US fiscal conditions as contributing to rising yields.

Bessenet acknowledged during his testimony that the US budget deficit also contributes to long-term Treasury yield increases, stating that the rise reflects 'the need to address the fiscal deficit.' Despite doubling the size of its long-term bond buyback program, the US Treasury has seen continued upward pressure on yields. However, Bessenet argued that without the buybacks, yields would have risen even more sharply, emphasizing the policy's effectiveness.

'You have to think about what might have happened if we hadn't done it,' he said, adding that two of the most successful Treasury auctions in 20 years had been conducted post-buyback. He also claimed that since the Trump administration took office, the US bond market has delivered the best performance among developed nations.

Markets are now closely watching Tuesday's Federal Reserve interest rate decision, with expectations high that the Fed may raise rates for the first time since July 2023 amid ongoing oil price increases and inflation pressures.