Bessenet refutes concerns about fluctuations in U.S. debt: market turbulence is not a discussion point, and the resilience of the U.S. economy is underestimated.

U.S. Treasury Secretary Scott Bessent dismissed concerns during an interview last Sunday regarding the recent increase in volatility in the U.S. Treasury market. He stated that fears about the rising U.S. debt levels and yield trends overlook the positive factors in the strength of the U.S. economy and its fiscal outlook. Bessent countered the growing skepticism regarding the volatility of the Treasury market and the Treasury Department's management strategies. He asserted, "First of all, Im not clear where the turmoil in the bond market is coming from," and pointed out that the U.S. Treasury market has "performed best" among similar global markets this year. With the G20 finance ministers and central bank governors' meeting scheduled for Monday in Asheville, North Carolina, Bessent emphasized that the U.S. is in a more favorable position than many developed economies because it can maintain substantial budget deficits while still achieving economic growth. "Its equally important that we are growing," he said. The benchmark U.S. Treasury yield remained largely flat over the past week, with the 10-year Treasury yield closing around 4.73% last Friday in a narrow trading range, reflecting investors' weighing of the fiscal outlook against signals of economic resilience. Despite renewed hostilities between the U.S. and Iran during Mondays Asian trading session, long-end yields showed little change. Bessent believes that the rise in yields is primarily driven by energy prices and inflationary pressures stemming from the conflict in Iran, but he expects these factors to dissipate over time. He added that higher yields actually reflect market confidence in the U.S. economy. In response to some central bank officials expressing concern over the Treasury Department's unexpected increase in bond buyback programs, Bessent refuted their claims. He denied that buyback operations distort the market or deviate from the Treasurys traditional predictable practices. Last week, Bessent announced that the Treasury would at least double the regular buyback amount for long-term bonds to $4 billion per operation. He reasoned that the prior surge in yields, which pushed 30-year borrowing costs to a 19-year high, had become disconnected from economic fundamentals. Bessent compared the U.S. buyback operations to larger-scale interventions abroad, pointing out the relatively little criticism faced by the policies during Mario Draghis tenure as European Central Bank president and the Bank of Japan's long-standing bond purchases. "When Mario Draghi did this in Europe, they seemed to have no objections; when the Japanese bought half of their own bond market, they also seemed to have no objections." Bessent stated that the size of the Treasury's announced buyback plan is far smaller than overseas regular buyback programs, aimed at mitigating market volatility that often intensifies during low trading volumes in August. He also noted that larger-scale buybacks have yet to be executed and will begin on September 10. "I dont think I can change the equilibrium price," Bessent said. "My job is to keep the market running smoothly... to ensure the market does not become disorderly."