The surge in borrowing costs has not created dysfunction in US financial markets, US Treasury secretary Janet Yellen said as she struck an optimistic tone about the capacity of banks, businesses and households to weather higher interest rates.
Speaking at the start of this week’s IMF and World Bank annual meetings in Marrakech, Yellen dismissed concerns about the rout in the $25tn market for US government bonds, which has pushed the yield on the 10-year Treasury note to the highest level since 2007 and dragged up borrowing costs in other countries.
“I haven’t seen any evidence of dysfunction in connection with the increase in interest rates,” she told the Financial Times. “When rates are more volatile, sometimes you see some impact on market function, but that is pretty standard.”