Treasury Secretary Scott Bessent has recently emphasized the strength of the U.S. bond market amid concerns over rising interest rates and increasing borrowing costs for Americans. During a congressional hearing on September 14, Bessent described the U.S. bond market as the “best-performing bond market in the developed world,” a claim that has drawn mixed reactions from market participants and analysts.
Bessent’s assessment is based on a comparison of 10-year Treasury yields with those of similar maturity bonds issued by five other developed countries: Britain, Germany, France, Italy, and Japan. According to a senior Treasury official, from the beginning of the Trump administration’s second term through mid-September, U.S. 10-year yields rose less than those of these countries. This narrower increase in yields is viewed by the Treasury as an indicator of relative outperformance during a period of global bond market sell-offs.
However, when looking at more recent data, the United States has not consistently led the pack. Since the start of 2023, Germany’s bond market has recorded the best performance, while Japan saw the smallest yield rise in the month before Bessent’s remarks. Beyond the five countries cited by the Treasury, U.S. bond performance appears more mixed, particularly in recent months. Nevertheless, the broader trend since the start of the administration’s current term supports the claim that U.S. yields have increased less than most peers.
The global rise in government bond yields, including the U.S., reflects widespread investor concerns about growing national debt levels and energy-driven inflation, partly attributed to geopolitical tensions involving Iran. The 10-year Treasury yield has approached its highest point since 2007, resulting in higher borrowing costs for consumers and businesses across America. This has translated into increased mortgage rates, car loan payments, and corporate borrowing costs, impacting affordability despite Treasury claims.
Other measures of bond market performance present a nuanced picture. In terms of total return to investors, U.S. Treasuries have outperformed most of the referenced countries this year. Data shows that U.S. Treasury bond indices posted a loss of about 1.4 percent through mid-September, outperforming Germany’s loss of over 2 percent and losses near 3 percent for France, Italy, Japan, and Britain. However, since the start of the current administration, Britain’s bond market has delivered a higher total return of approximately 7.5 percent compared to under 3 percent for the U.S.
Bessent also defended recent Treasury debt repurchase efforts aimed at lowering yields, describing subsequent Treasury auctions as the most successful in two decades. Although investor demand was strong, the auctions were conducted at historically high interest rates dating back to the global financial crisis, signaling increased borrowing costs borne by taxpayers.
In recent weeks, Bessent has taken a more assertive tone toward the bond market, declaring "I am the house now" to signal his commitment to containing yields. Some investors, however, remain skeptical, accusing him of presenting an overly optimistic narrative. Jeffrey Sherman, chief investment officer at DoubleLine Capital, characterized the Treasury secretary’s comments as “falsehoods” and suggested that Bessent is acting mainly on political directives.
As the U.S. bond market continues to navigate a complex global environment, the contrast between government assessments and investor experiences highlights the challenges of managing public debt amid rising interest rates and economic uncertainty.