US Treasury Secretary Scott Bessent said he does not anticipate a spillover from the French bond market, where surging yields have sparked a broader debate about the European nation's finances. "I don't anticipate a spillover from what's happening in France," Bessent said on Tuesday. "The French have a tough hand, but President Macron's economic team, whom I know very well, are really first rate."
France has been embroiled in protests in recent weeks, with unrest turning more violent over the weekend and catching the government by surprise. This has added pressure on the country's debt, which has underperformed its peers under a government struggling to contain its budget deficit. The extra yield investors demand to hold French 10-year bonds over safer German debt has risen as high as 159 basis points this month.
Bessent said the US is instead seeing a flight to quality into US Treasuries away from more concerning countries. Yields on the 10-year US bond have fallen around 20 basis points from an early October peak, when they reached their highest level in more than two decades. Bessent maintained that the US bond market "has been the best performing in the world" under President Donald Trump, with "four of our strongest bond auctions in the past 20 years."
Elevated yields have pushed US mortgage rates back above 7%, since they are benchmarked to the 10-year Treasury. Pending sales of existing US homes fell in September to a record low in data going back to 2001. Bessent said he expects mortgage rates to come down once energy shocks linked to the war with Iran ease, and pointed to recent housing legislation and the administration's plan to end the government conservatorship of Fannie Mae and Freddie Mac. He also said he does not plan to seek higher office and intends to remain at his post through the end of Trump's term.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing