Bessent refutes concerns about fluctuations in US debt: there is no way to talk about market turmoil, and the resilience of the US economy is underestimated

The Zhitong Finance App learned that during an interview last Sunday, US Treasury Secretary Scott Bessent (Scott Bessent) was not convinced by the concerns surrounding the recent increase in volatility in the US Treasury bond market. He said that concerns about rising US debt levels and yield trends have ignored the strength of the US economy and positive factors in its fiscal outlook.

Bessent refuted growing questions about the volatility of the treasury bond market and the Treasury's actions to manage the market. He said bluntly: “First, I don't know where the bond market turmoil started.” He also pointed out that the US Treasury bond market “performed best” in similar global markets this year.

Facing the upcoming two-day meeting of the Group of Twenty (G20) finance ministers and central bank governors to be held in Asheville, North Carolina on Monday, Beisent stressed that the US is in a better position than many advanced economies because it can maintain large budget deficits while maintaining large budget deficits. “Just as important, we're growing,” he said.

Benchmark US Treasury yields have remained flat over the past week. The 10-year Treasury yield closed at around 4.73% last Friday. The fluctuation range was narrow, reflecting investors' trade-offs between the US fiscal outlook and signs of economic growth resilience. Despite renewed fighting between the US and Iran during Monday's Asian trading session, there was little change in long-term yields.

Bessent believes that the rise in yield is mainly driven by energy prices and inflationary pressure caused by the Iran conflict, but it is expected that these factors will subside over time. He added that higher yields actually reflect the market's confidence in the US economy.

In response to concerns expressed by some central bank officials about the US Treasury's unexpected increase in the scale of bond repurchases, Bezent also refuted it. He denied that the buyback operation distorted the market or deviated from the Treasury's consistent tradition of predictable operations.

Last week, Bezent announced that the Treasury would at least double the regular repurchases of long-term bonds to at least $4 billion per operation. He believes that the sharp rise in yield, which previously drove the cost of 30-year loans to a 19-year high, is out of touch with economic fundamentals.

Basent compared the US buyback operation to a larger overseas intervention, pointing out that the policies of the time of Mario Draghi (Mario Draghi), the former ECB president, and the Bank of Japan's large-scale bond purchases over the years have faced less criticism. “When Mario Draghi did this in Europe, they didn't seem to have an opinion; when the Japanese bought half of their bond market, they didn't seem to have any opinions.”

Bessent said that the Ministry of Finance announced a regular repurchase plan on a much smaller scale than overseas, aimed at curbing market fluctuations — fluctuations often intensified in August when trading volume was scarce. At the same time, he pointed out that a larger repurchase operation has not yet been carried out and will commence on September 10.

“I don't think I can change the equilibrium price,” Bezent said. “My job is to keep the market running smoothly... making sure the market doesn't get out of order.”