Bessent shrugs off bond market sell-off as he touts US growth

US Treasury Secretary Scott Bessent downplayed a recent sell-off in the bond market, despite growing concerns over rising debt levels and energy-driven inflation. He stated during a G20 finance gathering in North Carolina that the US bond market had been performing well and a single month's performance was not indicative of long-term trends.

Treasury yields remained stable after increased Middle Eastern strikes, with the 10-year and 30-year yields only rising slightly. Bessent believed that low inflation expectations were driving the market, describing it as a "growth story". Federal Reserve Chairman Kevin Warsh echoed this sentiment, noting the global economy was entering a period of "secular growth" after a "global savings glut".

To stabilize bond markets, the Treasury Department announced plans to double its debt repurchases and increase options size, although this move was criticized by investor Stanley Druckenmiller who argued it was a "mistake far larger than $4 billion suggests". Druckenmiller maintained that liquidity tools could not solve solvency issues and only postponed the inevitable price increase.

Bessent dismissed this criticism, pointing out that US bond markets had been flat since Trump's election. He also highlighted the importance of US-Japan coordination on macroeconomic priorities, emphasizing the need for sound monetary policy to manage inflation and exchange rate volatility.