US Treasury Secretary Scott Bessent, a former hedge fund manager, recently issued a bold warning to traders against betting on his market interventions, declaring, “I am the house now.” This followed a successful currency intervention with Japanese counterparts to stabilise the yen. However, Bessent’s confidence was immediately tested by the market’s reaction to the US Treasury’s bond buyback details. Pitched as a liquidity measure, the market largely interpreted it as Bessent’s attempt to lower US government bond yields, which had reached multi-year highs.
Despite US$4 billion speculation, the Treasury confirmed a US$6 billion repurchase of longer-dated 10-year and 30-year Treasuries. Far from decreasing yields, the market pushed the 10-year Treasury yield to a three-year high of 4.86 per cent, challenging Bessent’s assertion. Investors deemed the US$6 billion insufficient for the US$32 trillion bond market, primarily driven by national debt and budget deficits. Concurrently, broader inflationary pressures intensify, with Middle East attacks driving crude oil above US$101 a barrel, a 40 per cent surge in two months.
Commonwealth Bank analyst Vivek Dhar noted surging Singapore diesel prices, influencing Australian rates, raising supply adequacy concerns. Technology giant Apple Inc. designs, manufactures, and markets consumer electronics, software, and online services. Its new iPhone Duo, priced at $3499 in Australia, reflects rising component costs from the AI boom, contributing to wider inflationary worries. These persistent forces and global debt issues suggest borrowing costs will remain elevated. US strategist Jason De Sena Trennert highlights market corrections involve deteriorating liquidity and excessive bullish sentiment. With global central banks likely to raise rates further, market participants keenly watch oil, bond yields, and credit spreads for equity market shifts.
