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Yellen warns of ‘dangerous and volatile environment’ as she pledges to support treasury markets


“We have experienced energy shocks, food shocks, supply shocks, persistent inflation in many countries around the world, rising interest rates in many parts of the world and we I have seen some volatility in financial markets as well as increased liquidity and credit concerns.”


– Secretary of the Treasury Janet Yellen

It was Treasury Secretary Janet Yellen, who warned on Monday that the current economic landscape was “dangerous and volatile”, while stressing that the US economy was “healthy” and that the financial system “recovered” during a public appearance at a securities industry conference.

She added that while she has no evidence of current instability, the Biden administration is “carefully monitoring financial risks in the United States.”

Yellen spoke of efforts to increase market liquidity for US government debt, after volatility in the UK bond market highlighted concerns that high inflation and rising government debt levels could reduce demand for Treasury debt.
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“We are very focused on the Treasury market,” Yellen said, adding, “it is extremely important that it performs well, has deep liquidity and serves as the benchmark for all assets. other”.

She added that it is expected with increased volatility that the costs of buying and selling these securities will increase, and noted that trading volumes remain high and traders are not having a hard time. in the execution of transactions.

Yellen said that the Biden administration is working across agencies to pursue policies that could enhance liquidity in the US government debt markets, including a rule proposal from the Securities and Exchange Commission that would force many transactions to be deleted centrally.

“We are looking at a number of ways to improve resilience,” she said, “but I don’t see a problem in the market right now.”

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