Bessent reiterated his belief that inflation would decrease due to cost savings from efficiency drives, deregulation, tax cuts, and increased energy supply, which could eventually lower longer-term yields. Following his comments, longer-dated US Treasuries saw a slight rise, with 10-year yields dropping to 4.50%. Bessent also mentioned that he met with Fed Chair Jerome Powell and would refrain from commenting on current monetary policy. Additionally, he assured that the US gold reserves remain intact and are available for inspection by senators.
Key takeaways:
- Treasury Secretary Scott Bessent stated that increasing the share of longer-term Treasuries in government debt issuance is not imminent due to current challenges like elevated inflation and the Federal Reserve's quantitative tightening program.
- Bessent criticized former Treasury Secretary Janet Yellen for increasing the share of short-term bills in US debt, which he argued suppressed longer-term yields.
- Bessent believes that inflation will retreat due to cost savings from the DOGE efficiency drive, deregulation, tax cuts, and an expansion in US energy supply, which would then allow for a drop in longer-term yields.
- Bessent dismissed speculation about revaluing US gold reserves to reduce borrowing needs or fund a sovereign wealth fund, stating that this was not his intention.