Besent “Extinguishes Fire”: Rising US Treasury yields are a global phenomenon, dismisses concerns over AI bubble

US Treasury Secretary Bessent has defended the recent rise in US Treasury yields and dismissed claims of an artificial intelligence bubble, while also hinting that the US government may provide more financial aid to additional allied countries in the future.

This week, the 10-year US Treasury yield briefly reached its highest level since 2002. Nevertheless, in a media interview, Bessent stated that the current rate trend is a global phenomenon and there is no need for excessive concern.

Bessent emphasized that this round of increases is not unique to the US, and there are no signs of a sell-off in US Treasuries or a shift to German or Japanese bonds.

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

His comments come as the US bond market has faced months of sustained pressure. High oil prices, concerns over fiscal health, and a surge in AI-related spending have all pushed up borrowing costs, with mortgage rates well above 7%, diesel prices hitting record highs, and inflation pressures impacting ordinary voters—turning into political risks for the Trump administration and the Republican Party ahead of the November mid-term elections.

In the interview, Bessent made a clear distinction between a “systemic rise” and an “abnormal rise.” He said:

If there were some unique abnormal increase, I’d be worried, but we’re not seeing that.

He also acknowledged:

I can't control the bond market; what I can do is encourage people to slow down and think calmly.

Friday’s weak employment data gave the market some breathing room, but US Treasuries had already suffered months of selloffs, with the 10-year benchmark rate briefly rising to a more than twenty-year high.

Bessent attributed current pressures in part to rising fuel prices caused by the Iran conflict, and expects that as the war enters its eighth month, the energy shock will eventually subside, “and oil prices will see more ample supply.”

On foreign financial policy, Bessent defended the Trump administration’s intervention in Argentina and did not rule out similar aid for other countries in the future.

Last year, the US stepped in to buy pesos and offered President Javier Milei’s government a $20 billion swap line to help stabilize the exchange rate and prevent a full-blown economic crisis. Bessent said:

I believe Argentina’s stabilization has prompted a historic shift in Latin America. Never before have so many Latin American countries stood together with the US. Could we do that again? Of course we could.

He also mentioned US support to Japan in propping up the yen, including the first coordinated joint yen-buying intervention by the two countries since 1998.

Addressing concerns about overheated AI spending and a potential bubble, Bessent responded directly to the market’s doubts.

He believes that leading technology companies like Microsoft, Google, and Meta are investing heavily, bringing substantial revenue growth to firms such as Anthropic and OpenAI, which is fundamentally different from a bubble with no underlying support.

In his view, the AI investment boom has solid commercial logic, and the current macro-level tightening is mainly driven by geopolitical energy shocks. As the Iran conflict eventually subsides and energy prices fall, this external disruption is expected to gradually diminish.