US Treasury Secretary Bessent asserts China isn’t weaponising Treasury amid bond market volatility from tariff policies.
In Short
US Treasury Secretary Scott Bessent addressed bond market volatility attributed to the Trump administration’s tariffs, assuring that China has not used its Treasury holdings as leverage.
He explained that rising yields indicate a lack of confidence in resolving trade conflicts, but selling Treasurys would harm China’s economy.
US Treasury Secretary Scott Bessent spoke to Yahoo Finance regarding recent bond market volatility linked to the Trump administration’s tariff policies.
While concerns grow about China potentially utilising its substantial Treasury holdings as leverage, Bessent stressed that such action has not occurred. He indicated that the US Treasury has measures in place to address any potential threats to the bond market.
Investors are noticing unusual activities in the bond market as stock sell-offs occur. Typically considered a safe haven, Treasurys are experiencing pressure, with the 10-year Treasury yield rising to 4.38% and mortgage rates surpassing 7%. Recent movements in the bond market are raising alarms about the US’s future debt repayment capabilities and a looming recession.
Diminishing confidence
Experts point out that rising yields reflect diminishing confidence in resolving ongoing trade conflicts and potential Treasury sales by China, the second-largest holder of US bonds. Bessent argued that it would not be economically beneficial for China to sell Treasurys, as doing so could impact their currency negatively.
Bessent illustrated this by comparing it to damaging personal assets during disputes. He noted that, despite tensions, China’s economic strategies and currency policies do not support the idea of them weaponising Treasurys.
The volatility stems from daily changes in tariff discussions, including a recent 90-day pause on reciprocal tariffs, with China remaining heavily affected by elevated tariff rates.
