Treasury Secretary Scott Bessent defended his assertion that he is “the house” when it comes to overseeing America’s bond market, but acknowledged that investors who bet against him might win a few hands.
The comments were made in an interview with Axios that was published on Saturday and came weeks after Mr. Bessent chided the “Bloomberg terminal bros” who were misunderstanding the strength of the U.S. economy. Since daring bond investors to bet against him in September, bond yields — which represent the interest rate investors are demanding to be paid to buy government debt — have continued to rise to multiyear highs.
“The house doesn’t win every hand, the house plays the percentages,” Mr. Bessent told Axios. “Everyone in the market knows, you don’t win every hand, you win over time.”
The Treasury secretary said that he still believed that the U.S. bond market remained the strongest in the world and that investors were not gravitating to German or Japanese bonds instead of U.S. debt. He said that bond yields, which move inversely to prices, have been rising because global oil prices have increased as a result of the war in Iran.
“I would be concerned if we were having some kind of idiosyncratic rise,” Mr. Bessent said.
The Treasury Department has been buying back longer-dated bonds and intervened in global currency markets to support the Japanese yen in an effort to contain rising U.S. bond yields, which translate to higher borrowing costs for Americans.
Mr. Bessent’s more humble tone was a marked contrast from September when the Treasury secretary insisted that investors who were shying away from U.S. debt were misguided.
“It’s my dream,” Mr. Bessent said at a fireside chat at Southern Methodist University. “I have asymmetric information. I am the house now.”
He added: “You can bet against me if you want.”
Since then, the yield on 10-year U.S. Treasury notes reached its highest level since 2002. The 10-year U.S. Treasury yield, which underpins corporate and consumer interest rates, soared as high as 5.34 percent last Thursday, before easing back to around 5.24 percent. That was still the highest level since 2007.
In the Axios interview, Mr. Bessent said that in suggesting that he was “the house,” he was trying to make the point that he had “superior information” about what policymakers were thinking. But he said that he did not believe that he could bend markets to his will.
“I can’t control the bond market,” Mr. Bessent said. “What I can do is try to get people to slow down and think.”
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