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Bessent: Rising government bond yields are a global trend.
Economy
U.S. Treasury Secretary Scott Bessent stated that the recent rise in Treasury
yields largely reflects a global trend of rising borrowing costs and is not a cause for concern in itself, even though inflationary pressures and massive government borrowing have pushed benchmark yields to multi-decade highs.
In an interview with Axios published on Saturday, Bessent noted that he would be more concerned if U.S. bond yields were rising due to factors specific to U.S. financial markets. He pointed out that investors are not simply exiting Treasuries to shift into German or Japanese government bonds, a trend that indicates a broader repricing of global debt markets.
His comments come as investors try to assess whether elevated long-term yields represent a temporary adjustment or a more lasting shift toward a global environment of high borrowing costs.
Bessent emphasized that the Treasury Department cannot dictate bond yield levels; however, policymakers can encourage investors to look beyond short-term market movements and consider the broader economic picture.
Global bond markets have been under sustained pressure in recent months, with government borrowing costs rising across major economies. The yield on 10-year U.S. Treasury bonds recently climbed to its highest level since 2002, while yields in Europe and Japan have also reached multi-decade highs. Persistent inflation concerns, rising government debt, and increased borrowing linked to artificial intelligence infrastructure have fueled the sell-off.
Rising energy prices, driven by the protracted U.S.-Iran conflict, have intensified inflation fears, while major technology companies are increasingly turning to debt markets to fund investments in data centers and other AI infrastructure. Consequently, mortgage rates remain above 7%, raising borrowing costs for households.
Bessent also addressed U.S. involvement in efforts to support the Japanese currency. Washington and Tokyo have coordinated their actions in the foreign exchange market, including conducting joint interventions to bolster the yen.
Although a weaker-than-expected U.S. jobs report brought some relief to bond investors, the Treasury market remains under pressure. The broad sell-off reflected a combination of inflation risks, fiscal concerns, geopolitical uncertainty, and rising demand for capital to fund AI development.
Bessent also dismissed concerns that the rapid expansion of AI investment is inevitably creating a speculative bubble. He pointed to major tech companies—such as Microsoft, Google (a division of Alphabet), and Meta Platforms—arguing that their massive AI spending is backed by substantial revenues and robust business growth.