Treasury Yields Near 5% as Market Pushes Back on Intervention Claims

U.S. Treasury yields rose to near-5% on Thursday, with the 10-year benchmark hitting 4.93%, its highest level since 2023. The increase comes as the Treasury Department announced a $6 billion purchase program for 10- to 20-year bonds, a step intended to add liquidity and support prices, but market participants say the move has not curbed the upward pressure on yields.

The rise follows a joint intervention by U.S. and Japanese authorities in late July that helped the yen recover against the dollar. The yen’s strength was welcomed by Scott Bessent, a former hedge-fund trader who previously described the currency as undervalued. Bessent has suggested that his market influence could shape Treasury dynamics, but analysts say the bond market has largely ignored his statements.

"Normally, when these red lines are put out, people like to test them," said Thomas Kikis, head of markets for the U.S. & Americas at Standard Chartered. He added that the market is likely to test Bessent’s influence over the coming days.

White House spokesperson Kush Desai praised Bessent’s past interventions, noting his role in stabilizing the Argentine peso, but offered no specific comment on the current Treasury situation.

If the 10-year yield reaches 5%, investors may shift more capital into bonds despite equities trading near record highs, Kikis said. Higher yields would increase borrowing costs for the U.S. government, which is already managing a national debt of about $40 trillion.

Bessent has previously downplayed the debt burden, suggesting the economy could “grow its way out of that.” Analysts acknowledge strong corporate growth and productivity gains linked to the AI boom, but caution that sustained yield increases could pressure fiscal policy.

The bond market’s reaction comes amid rising oil prices, with Brent crude settling above $100 a barrel, reviving concerns about inflation. While Federal Reserve Chair Kevin Warsh has signaled a quieter policy stance, traders continue to look to Bessent for clues on Washington’s approach to interest rates and Treasury yields.