US Treasury yields cross 5% as Scott Bessent warns of ‘global issues’ impacting bonds

US Treasury Secretary Scott Bessent on Tuesday connected the high US government bond yields to broader “global issues” but did not identify what was triggering the massive bond market sell-off. Bessent made the comments on Tuesday while appearing before the House Financial Services Committee, as the 10-year Treasury yield climbed above 5 per cent to the highest level since July 2007, exactly before the stock market topped out and crashed into the Great Recession.

Brent Crude has reached over $100 a barrel as conflict involving Iran has disrupted the global energy supply. The average 30-year fixed mortgage rate crossed 7 per cent the prior week. The US Treasury executed an aggressive bond buyback program of up to $6 billion, specifically targeting older, less-liquid bonds maturing in 10 to 30 years. Despite executing the massive buyback, the 10-year bond yield is around 5.04 per cent on Tuesday.

When Bond yields are higher, meaning people are doubtful about buying long-term US government debt, the Treasury executes a buyback of bonds using T-bills to create demand for government debt. However, the scale of the buyback is unprecedented. In August 2026, it shifted its maximum buyback cap from the previously planned $2 billion baseline up to $6 billion for targeted long-dated operations.

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"There was the counterfactual of what it would have done," said Bessent defending the US Treasury Department's purchase of long-dated Treasury bonds, arguing that yields would have climbed further if they did not do so. "And then we proceeded to have two of the most successful Treasury bond auctions that we've had in 20 years." He also said he is working on deficit-reduction plans that he believes would ease yields. "I believe that the 10-year yield reflects many things, but the need to address the deficit is one of those," he said.

However, Wall Street analysts were zeroing in on a dropping cover ratio for long-dated bond purchases; Bessent focused on the broader health of regular government debt auctions to prove that international investor confidence is not broken. US stocks tumbled with the latest yield spike, with the Dow shedding more than 500 points by around midday, while the S&P 500 slid 0.45 per cent and the Nasdaq Composite dropped 0.73 per cent.

Markets are hinting at a dip that is long overdue. The combination of 5.04 per cent benchmark bond yields, $104+ oil, and a falling stock market forms a classic macroeconomic squeeze that historically pops asset bubbles. “We're entering late innings of the cycle, arguing for multiple compression,” Wells Fargo wrote, flagging the risk of a 5 per cent to 10 per cent drawdown in stocks this year.