The US Treasury Secretary expressed optimism, stating that high inflation and high yields are only a short-term phenomenon.
2026-05-21 09:57:44
Geopolitical tensions have triggered sharp fluctuations in the energy market. Coupled with rising inflation and the failure of market expectations for interest rate cuts, the bond market is currently under significant pressure, with various investment institutions and central banks of many countries expressing their concerns.
U.S. Treasury Secretary Scott Bessent, however, held a different view, stating that the current high yields on U.S. Treasury bonds and overall inflation data are temporary. Once the situation stabilizes, energy prices and price levels will return to normal, and there is no need to overemphasize medium- to long-term market risks.
On Tuesday (May 19), a meeting of G7 finance ministers was held in Paris. Senior officials from the financial and monetary sectors of participating countries generally expressed concerns about the current market situation, with a focus on the continued rebound in inflation and the chain reaction of negative impacts from concentrated bond sales. Overall, they were cautious and pessimistic.
Scott Bessant stated that central bank officials, out of a sense of duty, are accustomed to issuing risk warnings to the public. He said that the more hawkish the monetary policymakers' public stance, the lower the probability of actual tightening policies being implemented; market sentiment can be stabilized through public opinion guidance.
He also mentioned the views of Bank of Canada Governor Tiff Macklem, who believes that the current macroeconomic environment is difficult, and central banks around the world are under pressure to passively raise interest rates to hedge against inflation. However, once social consumption and market demand weaken, central banks can quickly adjust their policy direction and turn to easing and interest rate cuts, so the overall policy adjustment space is relatively flexible.
Faced with widespread anxiety in the market, the US Treasury Secretary remained calm and did not echo the market's panic. He stated that the current round of changes, including energy price increases and interest rate hikes driven by geopolitical conflicts, are highly short-term in nature and lack any basis for long-term sustainability.
In his view, the geopolitical standoff will eventually subside. Once shipping through the Strait of Hormuz resumes, the global energy supply chain will return to normal, international oil prices will gradually decline, and the upward pressure on prices due to energy price increases will dissipate, allowing the overall market order to fully return to normal.
Driven by pessimism, the adjustment in the US Treasury market continued. On Wednesday, the yield on the 10-year Treasury note reached a high of 4.682%, briefly touching its highest level since January 2025; the yield on the 30-year Treasury note reached a high of 5.200%, just a step away from the historical high in June 2007. The persistently high long-term interest rates continue to raise the overall financing costs for society.
The trading structure of the crude oil market clearly shows that capital had already anticipated that the high prices in the short term would be unsustainable. Brent crude oil futures prices for near-month delivery remained high, with the July contract priced at around $105 per barrel, while the December contract price fell back to $88 per barrel. This price difference between near and far contracts directly reflects the market's consensus that high energy prices are only a temporary phenomenon.
Scott Bessant's analysis suggests that as long as geopolitical tensions persist, overall inflation will remain high. However, this type of short-term price increase driven by energy is unlikely to transmit deeply to core inflation within three to four months. Currently, core inflation itself is on a steady downward trend, and the overall price fundamentals have not fundamentally deteriorated.
In summary, the current surge in market anxieties stems primarily from the chain reaction triggered by the short-term energy shock. Bond market adjustments and rising inflation are both temporary fluctuations caused by unforeseen external factors. According to the US Treasury Secretary, such market movements lack fundamental support for long-term sustainability. As the situation eases and energy prices return to a reasonable range, inflationary pressures will naturally subside, and US Treasury yields will gradually decline.
Compared to the central bank's more cautious policy approach, the fiscal authorities tend to take a more rational view of short-term market fluctuations, believing that there is no need to change the medium- and long-term economic and market operating rhythm due to temporary risks.
U.S. Treasury Secretary Scott Bessent, however, held a different view, stating that the current high yields on U.S. Treasury bonds and overall inflation data are temporary. Once the situation stabilizes, energy prices and price levels will return to normal, and there is no need to overemphasize medium- to long-term market risks.
Global policy circles are divided, with significant disagreements emerging among various parties.
On Tuesday (May 19), a meeting of G7 finance ministers was held in Paris. Senior officials from the financial and monetary sectors of participating countries generally expressed concerns about the current market situation, with a focus on the continued rebound in inflation and the chain reaction of negative impacts from concentrated bond sales. Overall, they were cautious and pessimistic.
Scott Bessant stated that central bank officials, out of a sense of duty, are accustomed to issuing risk warnings to the public. He said that the more hawkish the monetary policymakers' public stance, the lower the probability of actual tightening policies being implemented; market sentiment can be stabilized through public opinion guidance.
He also mentioned the views of Bank of Canada Governor Tiff Macklem, who believes that the current macroeconomic environment is difficult, and central banks around the world are under pressure to passively raise interest rates to hedge against inflation. However, once social consumption and market demand weaken, central banks can quickly adjust their policy direction and turn to easing and interest rate cuts, so the overall policy adjustment space is relatively flexible.
US Treasury Secretary confidently believes the market is experiencing short-term disruptions and is optimistic about a subsequent recovery.
Faced with widespread anxiety in the market, the US Treasury Secretary remained calm and did not echo the market's panic. He stated that the current round of changes, including energy price increases and interest rate hikes driven by geopolitical conflicts, are highly short-term in nature and lack any basis for long-term sustainability.
In his view, the geopolitical standoff will eventually subside. Once shipping through the Strait of Hormuz resumes, the global energy supply chain will return to normal, international oil prices will gradually decline, and the upward pressure on prices due to energy price increases will dissipate, allowing the overall market order to fully return to normal.
The continued rise in US Treasury yields highlights the pressure on the market.
Driven by pessimism, the adjustment in the US Treasury market continued. On Wednesday, the yield on the 10-year Treasury note reached a high of 4.682%, briefly touching its highest level since January 2025; the yield on the 30-year Treasury note reached a high of 5.200%, just a step away from the historical high in June 2007. The persistently high long-term interest rates continue to raise the overall financing costs for society.
The weakening of crude oil futures prices was already anticipated by the market and a price decline was expected.
The trading structure of the crude oil market clearly shows that capital had already anticipated that the high prices in the short term would be unsustainable. Brent crude oil futures prices for near-month delivery remained high, with the July contract priced at around $105 per barrel, while the December contract price fell back to $88 per barrel. This price difference between near and far contracts directly reflects the market's consensus that high energy prices are only a temporary phenomenon.
Scott Bessant's analysis suggests that as long as geopolitical tensions persist, overall inflation will remain high. However, this type of short-term price increase driven by energy is unlikely to transmit deeply to core inflation within three to four months. Currently, core inflation itself is on a steady downward trend, and the overall price fundamentals have not fundamentally deteriorated.
Summarize
In summary, the current surge in market anxieties stems primarily from the chain reaction triggered by the short-term energy shock. Bond market adjustments and rising inflation are both temporary fluctuations caused by unforeseen external factors. According to the US Treasury Secretary, such market movements lack fundamental support for long-term sustainability. As the situation eases and energy prices return to a reasonable range, inflationary pressures will naturally subside, and US Treasury yields will gradually decline.
Compared to the central bank's more cautious policy approach, the fiscal authorities tend to take a more rational view of short-term market fluctuations, believing that there is no need to change the medium- and long-term economic and market operating rhythm due to temporary risks.
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