Bessant quells concerns: Rising US Treasury yields are a global phenomenon; refutes AI bubble fears.

U.S. Treasury Secretary Bessenter defended the recent rise in Treasury yields and refuted claims of an artificial intelligence bubble, while hinting that the U.S. government may provide financial assistance to more allied countries in the future.

This week, the yield on 10-year US Treasury bonds touched its highest level since 2002. Nevertheless, in a media interview, Bessant said that the current interest rate trend is a common phenomenon globally and there is no need to worry excessively.

Bessant emphasized that this round of gains was not unique to the United States, and there were no signs of the market selling off US Treasuries and buying German or Japanese government bonds.

On the economic front, he believes that the external shock from the war with Iran has masked the inherent resilience of the US economy, with strong consumer spending and median wage growth roughly in line with inflation.

This statement comes against the backdrop of months of pressure on the US bond market. High oil prices, concerns about fiscal health, and surging AI spending have collectively driven up borrowing costs, with mortgage rates well above 7% and diesel prices hitting record highs. The impact of inflationary pressures on ordinary voters is translating into political risks for the Trump administration and the Republican Party in the November midterm elections.

Rising yields: a global phenomenon, not unique to the US

In the interview, Bessant clearly distinguished between the concepts of "systemic rise" and "abnormal rise." He said:

I would be concerned if it were some kind of unusual surge, but we haven't seen that.

He also admitted:

I can't control the bond market, but I can help people slow down and think things through.

The weak jobs data released on Friday provided some respite for the market, but U.S. Treasuries had already suffered months of selling, with the 10-year benchmark rate briefly rising to a more than 20-year high.

Bessant attributed the current pressure in part to rising fuel prices due to the conflict with Iran, and predicted that the energy shock would eventually subside as the war enters its eighth month, "and oil prices will be more adequately supplied."

Opening up more "Argentine-style" financial bailouts, refuting the AI bubble.

On foreign and financial policy, Bessant defended the Trump administration's intervention in Argentina and said he would not rule out similar bailouts for other countries in the future.

Last year, the United States intervened by buying up Argentine pesos and providing a $20 billion swap line to the government of President Javier Milei to help stabilize the Argentine currency and avert a full-blown economic crisis. Bessant said:

I believe that Argentina's stability has spurred a historic shift in Latin America, with an unprecedented number of Latin American countries standing with the United States. Can we do that again? Of course we can.

He also mentioned that the United States assisted Japan in supporting the yen, including the first coordinated joint yen intervention by the two countries since 1998.

Bessenter responded positively to market concerns about overheating and a bubble in AI spending.

He believes that leading technology companies such as Microsoft, Google, and Meta are investing heavily and bringing substantial revenue growth to companies like Anthropic and OpenAI, which is fundamentally different from a bubble without fundamental support.

In his view, the AI investment boom has a solid business logic, while the current macroeconomic tightening pressure stems more from geopolitical energy shocks. As the conflict with Iran eventually subsides and energy prices fall, this external disturbance is expected to gradually subside.

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