(Bloomberg) — Treasury Secretary Janet Yellen said that stronger than expected economic data spurred a repricing of expectations for interest rates that’s contributed to a selloff in US Treasuries.
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“When we see strong data — surprises to the upside on indicators to the performance of the economy — that suggests that the path of interest rates going forward is going to be a little bit higher than people expected,” Yellen said in an interview with CNBC Wednesday. She was responding to a question on what’s behind the slide in Treasuries in recent weeks that’s pushed yields higher.
Ten-year Treasury yields on Wednesday hit around 4.73%, the highest since last April. Interest-rate futures show traders have pared back expectations for the scale of Federal Reserve rate cuts for 2025.
Yellen also said that the so-called term premium has “begun to normalize,” referring to the extra yield that investors are thought to demand for buying longer-term securities rather than simply rolling over investments in short-term ones.
The term premium had been at “very low levels” for some time, she noted. But now that the economy has been doing well, it has begun to climb, she said.
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