US, Oct 21 : US Treasury Secretary Scott Bessent has said he does not expect turmoil in France’s bond market to spill over into broader financial markets, despite rising borrowing costs and growing concerns about the country’s public finances.
Speaking on 2Way Tuesday, Bessent acknowledged the challenges confronting France but expressed confidence in the expertise of President Emmanuel Macron’s economic team.
“I don’t anticipate a spillover from what’s happening in France,” Bessent said, adding that he knew Macron’s economic advisers well and considered them highly capable.
France has faced mounting political and economic pressure in recent weeks, with protests escalating and episodes of violence catching the government off guard. The unrest has added to investor concerns about the country’s fiscal position as authorities struggle to rein in the budget deficit.
The pressure has been reflected in the bond market, where investors are demanding higher returns to hold French government debt compared with German securities, which are generally regarded as a safer investment within the euro area.
The yield premium on French 10-year government bonds over their German counterparts climbed to as much as 159 basis points this month, highlighting growing concerns about France’s debt burden and fiscal outlook.
Bessent said the United States had benefited from investors seeking relatively safer assets amid uncertainty in other markets.
While describing the movement of funds into US government debt as an unintended consequence rather than a policy objective, he noted that American Treasuries had attracted demand from investors concerned about financial risks elsewhere.
Developments in France have influenced US Treasury trading on several occasions since the situation intensified late last month. At times, movements in French bonds have coincided with declines in US debt prices, while on other occasions investors have shifted funds into Treasuries as a safe-haven investment.
Yields on 10-year US Treasury notes have fallen by around 20 basis points from their early-October peak. They had climbed to their highest level in more than two decades amid elevated energy costs and increased corporate borrowing to finance artificial intelligence infrastructure.
Bessent defended the performance of the US bond market under President Donald Trump, describing it as the strongest among major markets. He also pointed to four particularly strong Treasury auctions conducted over the past 20 years.
However, elevated government bond yields continue to affect American households. Mortgage rates, which are closely linked to the 10-year Treasury yield, have risen above 7 per cent again, increasing the cost of home financing.
Data released on Tuesday showed that pending sales of existing homes in the United States fell in September to their lowest level since records began in 2001, underscoring the pressure facing prospective buyers.
Bessent also identified higher energy prices stemming from the conflict involving Iran as a factor contributing to rising Treasury yields. He expressed optimism that borrowing costs would eventually ease once the energy shock subsides.
“We will get to the other side of this and I think that mortgage rates will come down,” he said.
The Treasury secretary also pointed to recent housing legislation passed by Congress, which includes provisions aimed at restricting institutional investors from certain segments of the housing market. He suggested that the measures could help address housing affordability concerns.
Separately, the Trump administration is considering ending government conservatorship of mortgage finance companies Fannie Mae and Freddie Mac. Bessent said the administration could pursue the plan next year or the following year.
The two companies play a central role in the US housing finance system by supporting mortgage lending and the broader secondary mortgage market.
Bessent also ruled out pursuing higher political office, saying he intended to remain Treasury secretary through the end of Trump’s presidential term.
His remarks come as investors assess the effects of political uncertainty, fiscal pressures and energy-market disruptions on government borrowing costs. Although Bessent dismissed the prospect of a major spillover from France, movements across international bond markets continue to influence investor sentiment and US financing conditions.