US Treasury chief defends Trump economic strategy

US Treasury Secretary Scott Bessent has defended a range of economic policies pursued by the Trump administration, including measures affecting currency and bond markets, while confirming plans to meet his Chinese counterpart this weekend.

Bessent appeared before the House Financial Services Committee on Tuesday for a hearing focused on the international financial system, including proposed reforms to the International Monetary Fund and World Bank.

However, lawmakers also questioned the Treasury secretary about financial markets, the US economy and the administration's economic measures against Iran.

Bessent said US President Donald Trump and Chinese President Xi Jinping were expected to continue discussions next week about Iran and China's financial links with Tehran.

Washington has been seeking to restrict Iran's access to Western financial systems as the conflict involving Iran enters its seventh month.

The hearing was briefly disrupted by several protesters who stood and called for an end to sanctions against Iran and an end to the war. Bessent was forced to pause his opening remarks several times before the protesters were removed from the room.

Financial markets were another major focus of the hearing, with US Treasury yields having risen sharply in recent weeks.

The yield on the benchmark 10-year Treasury note reached levels on Tuesday not seen since 2007, as bond markets across major economies came under pressure.

Analysts have linked the rise in US Treasury yields to several factors, including higher oil prices, expectations surrounding the Federal Reserve's interest-rate policy, competition for investment capital from artificial intelligence projects and concerns about the US government's fiscal position.

Bessent acknowledged that the increase in the 10-year yield reflected, among other factors, the need to address the federal budget deficit.

The Treasury has increased the size of its longer-term debt buybacks, a move Bessent has described as a way of providing liquidity to the market and helping contain upward pressure on borrowing costs.

Despite the continued rise in yields, Bessent told lawmakers that the buyback programme had helped prevent yields from rising even further.

He also argued that recent Treasury auctions demonstrated continued confidence in US government debt.

Bessent said the results should be considered against what might otherwise have occurred in the bond market, pointing to two Treasury auctions he described as among the strongest in two decades.

He also said that since Trump returned to office, the US bond market had performed strongly compared with other developed markets.

The Treasury secretary's appearance came as investors continued to assess the outlook for US interest rates, government borrowing and the broader global economy.