U.S. Treasury Secretary Besant responded to the recent turmoil in the U.S. bond market during his visit to Buenos Aires, Argentina, stating that he does not believe foreign investors are massively selling off U.S. Treasury bonds. He emphasized that the recent decline in the bond market is primarily due to deleveraging rather than sell-offs by sovereign nations. Besant pointed out that demand from foreign investors actually increased in last week's 10-year and 30-year Treasury auctions, indicating continued interest in U.S. Treasuries.
Besant denied speculations in the market that other sovereign nations might be reducing their holdings of U.S. debt, stating that he has not seen any evidence that sovereign nations are driving down U.S. bond prices. Previously, the Japanese government clearly stated that during the upcoming U.S.-Japan tariff negotiations, they would not use their holdings of U.S. Treasuries as bargaining chips.
Besant also reiterated the U.S.'s commitment to a strong dollar policy and noted that the Treasury has a comprehensive set of tools to address market volatility. He mentioned that while emergency measures are not currently needed, the Treasury can initiate buyback programs and has the capability to increase the scale of such buybacks if necessary.
Despite the U.S. bond market experiencing its largest weekly drop since 2001 last week, accompanied by a decline in the dollar, Besant expressed that confidence in U.S. assets has not significantly weakened. He noted that his recent meeting with Federal Reserve Chair Powell did not specifically discuss concerns about the bond market, and he stated that if Powell were worried about market turmoil, the public would have already heard a statement from the Federal Reserve.
In addition, Besant revealed that he will begin interviewing candidates for the successor to the Federal Reserve Chair this fall. The current Fed Chair Powell's term is set to end in 2026, but there is ongoing market interest in whether he might step down early. Besant's statement indicates that the discussion about the transition in the Fed leadership will begin in the coming months.
