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The outperformance of local-currency debt has led to an unusual situation where the historically riskier bonds are trading at lower yields than those denominated in the dollar — traditionally the world's main haven asset.
US bonds have been whipsawed this month as President Donald Trump's move to impose global tariffs raised threats to the economy, undermining Treasuries' reputation as the world's safest asset.
The rebound in bonds eased concerns that built last week, when a steady rise in yields threatened to deal the US economy another hit by pushing up the cost of all kinds of loans.
Bessent reiterated his interpretation of the decline being mainly a product of deleveraging, saying he had no evidence that sovereigns were behind the drop.
Investor confidence in US bonds can no longer be taken for granted — not after a years-long borrowing binge, not with a president hell-bent on rewriting the rules at home and abroad and antagonizing many of the country's biggest creditors.
The yield on 30-year Treasuries briefly pushed over 5% in Asia and the pressure seeped into other markets, with yields rising sharply in Australia, the UK and in the developing world.
It's bringing back memories of the basis-trade unwinds at the onset of the pandemic — when widespread deleveraging sparked blowups of the popular hedge fund strategy that sent bonds tumbling.
In Germany, the 10-year bund at 2.66% reflects the prospect of a flood of bond issuance as the government ramps up defense spending.
The bid for havens also saw traders boosting bets on Fed interest-rate cuts, fully pricing in a quarter-point move by June.
The ceiling kicked back in at the start of the year, since when the Treasury has been using special accounting maneuvers to make good on all obligations on time.
Leading up to President Donald Trump's April 2 deadline on levies, the options traders prefer to own exposure to US government debt due in five years.
A rise in U.S. Treasury yields from very low levels in 2020, has resulted in diminished debt affordability, with interest payments-to-revenue hitting about 30% by 2035.
The bonds are tied to rights to collect mortgage payments, known as mortgage servicing rights, and it's only the second such deal that's non-recourse.
For bond investors who'd been piling into Treasuries over recent weeks, Wednesday's Fed policy announcement offered vindication.
Money-market funds with cash to invest are doing more repo — extending overnight credit to owners of Treasuries, causing the rates on the loans to decline.
The bond market in the past month has been caught between signs that US economic growth is slowing.
He also reiterated that he and Trump are focused on bringing down 10-year Treasury yields, rather than on the Fed's short-term benchmark rate.
The rally gained additional pace late in the session after President Donald Trump said there was no room left for a deal on Canada and Mexico tariffs ahead of their effective date Tuesday.
Treasuries gained for a sixth straight session. Morgan Stanley say the 10-year has scope to fall back below 4% if the prevailing view on the Fed shifts.
The confabs are a sign that Republicans are getting serious about negotiating the contours of a tax deal, even as the House and Senate are pursuing separate strategies.
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