Yellen: Bond Sell-Off Due to Deleveraging, Not Foreign Sales

U.S. Treasury Secretary Janet Yellen addressed recent concerns about the bond market sell-off, asserting that there is no evidence to suggest that the downturn is due to sovereign entities offloading their U.S. Treasury holdings. Yellen emphasized that the decline in the bond market is primarily a result of deleveraging, a process where investors reduce their debt levels by selling off assets.

Yellen's comments come at a time when there has been speculation about foreign investors selling off their U.S. Treasury holdings, which could potentially destabilize the market. However, Yellen pointed out that there was increased foreign demand in last week's auctions of 10-year and 30-year U.S. Treasuries, indicating that foreign investors are not selling off their holdings en masse.

Yellen also mentioned that the Treasury Department has a range of tools at its disposal to address any market turmoil if necessary. She stated, "We are far from taking action," but added that "we have a large toolbox to deploy." This toolbox includes the department's old securities repurchase program, which Yellen mentioned could be ramped up if needed.

Yellen's remarks aim to reassure investors and the public that the Treasury Department is monitoring the situation closely and is prepared to take action if necessary. Her comments also underscore the importance of deleveraging in the current market environment, as investors seek to reduce their debt levels in response to economic uncertainty.