Ex-Treasury Secretary Janet Yellen on Monday expresssed concern that President Donald Trump's tariffs and other policies were eroding allies' trust in US commitments, stating that some investors were starting to shun US assets.
Yellen said that last week's surge in yields on US Treasury debt, which move inversely to prices, was troublesome given their traditional safe-haven status, calling into question the safety of what is the bedrock of the global financial system.
“I don't think we're seeing dysfunction in the sense of liquidity completely drying up in the markets, but a pattern suggestive of a loss of confidence in US economic policy and the safety of bedrock financial assets is really very worrisome,” Yellen said.
US Treasury yields reportedly subsided on Monday after the Trump administration's weekend disclosure that smartphones, computers and semiconductors would get at least a temporary reprieve from Trump's highest China tariffs.
DAILY POST reports that the benchmark 10-year Treasury yield was down 8 basis points since Friday to 4.41%, but still up substantially from 3.99% on April 4.
The ex-US Treasury Secretary said that she was pleased to see good results from last week's 10-year and 30-year bond auctions, adding that she would not recommend shifting to more short-term bill issuance as a response to higher longer-term Treasury yields.
She further stated that it was important to have regular and predictable issuance that meets market demand.
“So I don't think that moving to bill issuance because you're disturbed that long rates have gone up would be a sensible financing strategy,” she said.
Yellen repeated earlier comments that Trump's tariffs and other policies were taking a “sledgehammer” to the US economy and to US alliances, citing doubts over its commitments to NATO, to Ukraine, and the US-Mexico-Canada agreement on trade.
