10-Year Bond Soars to 5.041%... Besant: Reflecting Global Factors and Fiscal Deficit
[Mexico City = Shim Young-jae, Correspondent] The yield on the U.S. 10-year Treasury bond has surged to 5.041%, the highest level since 2007, with U.S. Treasury Secretary Scott Besant citing global issues as a backdrop for the rise in interest rates. He acknowledged that the need to address the fiscal deficit is also reflected in the bond yields, while evaluating the recent long-term Treasury buyback by the U.S. Treasury as successful.
According to Reuters, Secretary Besant appeared before the U.S. House Financial Services Committee on the 15th (local time) to explain U.S. Treasury yields, the fiscal deficit, Treasury buybacks, and the value of the dollar. On that day, the yield on the U.S. 10-year Treasury bond rose to 5.041%, marking the highest level since 2007.
10-Year Bond at 5.041%... "Global Issues"
According to Reuters, Secretary Besant told reporters before entering the hearing that the recent rise in Treasury yields is due to "global issues."
Not only in the U.S. but also in other major countries, there has been a sell-off of government bonds, with the yield on the U.S. 10-year Treasury bond reaching its highest level since 2007.
Reuters reported that analysts cite high international oil prices and expectations of a Federal Reserve interest rate hike this week as reasons for the rise in U.S. Treasury yields.
Concerns over funding demand competition due to the expansion of artificial intelligence (AI) investments and the U.S. fiscal path were also mentioned as factors contributing to the rise in rates.
Secretary Besant also acknowledged during the hearing that the rise in the 10-year Treasury yield reflects the "need to address the fiscal deficit" alongside other factors.
Despite the recent buyback of long-term Treasuries by the Treasury Department, U.S. Treasury yields have risen.
Secretary Besant has previously explained that long-term Treasury buybacks are a way to provide liquidity to the market and to suppress or at least slow the rise in Treasury yields.
"Successful Treasury Buyback... Most Successful Auction in 20 Years"
Secretary Besant evaluated that although interest rates have risen, the Treasury's buyback of Treasuries has been successful.
He stated, "We need to consider the counterfactual of what would have happened if we had not conducted the buyback," citing the performance of subsequent Treasury auctions as evidence.
Secretary Besant said, "Subsequently, we conducted the two most successful U.S. Treasury auctions in the last 20 years."
He further claimed that the U.S. Treasury market has been "the best-performing bond market among advanced countries" since President Donald Trump's inauguration.
Secretary Besant noted that the strength of the U.S. dollar also reflects the credibility of President Donald Trump's administration.
He stated, "A strong dollar is not just a price displayed on the screen; it is a series of actions." He further claimed that trillions of dollars are flowing into the U.S. as the current administration creates certainty in regulations, taxes, trade, and energy.
Meeting with China's He Lifeng This Week... U.S.-China Summit Next Week
Secretary Besant confirmed that he is scheduled to meet with Chinese Vice Premier He Lifeng this week.
According to Reuters, this meeting comes ahead of the scheduled talks next week between President Donald Trump and Chinese President Xi Jinping.
Secretary Besant stated that President Donald Trump and President Xi will continue discussions on the Iran issue and China's financial relations with Iran.
Reuters reported that the U.S. is attempting to block Iran from the Western financial system as the war with Iran continues into its seventh month.
The hearing was convened to address issues related to the international financial system, the International Monetary Fund (IMF), and World Bank reforms.
However, the questions from lawmakers expanded to include the financial markets, the U.S. economy, and financial sanctions against Iran.
As the hearing began, several protesters emerged, demanding an end to sanctions against Iran and the war. During this process, Secretary Besant paused and then resumed his opening remarks, while the protesters were removed from the hearing room.
Yen Intervention Defense... "Signal of Support for Japanese Policy"
Secretary Besant defended the joint yen market intervention conducted by the U.S. and Japan. He explained that the U.S. engaged in joint intervention to signal support for Japan's policies.
Democratic lawmakers focused their inquiries on the U.S. economic situation and inflation issues.
They linked the Iran war and rising international oil prices to inflation issues. In response, Secretary Besant attributed the responsibility for rising prices to the Biden administration, claiming that Americans are in a better situation than they were under the Trump administration.
Questions also arose regarding President Donald Trump's proposal to provide $5,000 to each American if the Republican Party maintains a majority in Congress in the November elections.
Secretary Besant stated that if congressional approval is deemed necessary for the payment, he would work with House Speaker Mike Johnson to push it forward.
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