▲ Federal Reserve Chair Kevin Warsh
US Federal Reserve (Fed) Chair Kevin Warsh has cited three main factors behind the recent rise in Treasury yields: a robust economy, competition for capital among big tech companies, and conflicts around the world.
Speaking at a press conference following the Federal Open Market Committee (FOMC) meeting on the 16th (local time) in response to a question about what the rising Treasury yields are signaling, Warsh said, "The 10-year US Treasury is a risk-free asset that serves as the benchmark for all asset prices globally, and the factors influencing it are very complex," while outlining the three factors.
First, he pointed to a robust economy.
Warsh assessed that one of the reasons long-term Treasury yields have risen this year is because the economy has grown stronger.
As the second factor, Warsh pointed to the competition for capital among hyperscalers (large-scale data center operators).
He stated, "The surge in capital expenditures (CAPEX) is a real phenomenon," adding, "Hyperscalers are raising funds in the market, and intense competition to attract capital is becoming a factor pushing up Treasury yields."
Listing geopolitical factors as the third background, he said, "The situation in conflict zones around the world is driving up long-term Treasury yields."
He added, "Not only the spot prices of major commodities like energy, corn, soybeans, and wheat, but also the difference between spot prices and the so-called crack spread (refining margins) is an important factor. This affects the prices of goods distributed in American stores."
He further noted, "While I believe these three are the primary reasons, of course, this cannot be said to be the entirety of it."
(Photo: AP, Yonhap News)
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