Yellen: "Rising Treasury Yields Reflect Strong Economy... No Signs of Recession" (Comprehensive)

U.S. Treasury Secretary Janet Yellen emphasized the possibility of a soft landing, stating that the rise in U.S. Treasury yields exceeding 5% reflects the economy's resilience. U.S. President Joe Biden also dismissed the formula of "post-inflation recession," citing the sharp growth in U.S. GDP in the third quarter of this year. He stressed, "(The GDP growth) is a result that shows the flexibility of U.S. consumers and workers supported by Bidenomics (Biden + economics)." However, concerns about economic slowdown due to prolonged high interest rates in the fourth quarter of this year are emerging in the market.

Yellen: "Interest Rates Rose Thanks to a Strong Economy"

On the 26th (local time), in an interview with Bloomberg News, Secretary Yellen addressed the recent surge in U.S. Treasury yields (10-year) to the highest level since the financial crisis, saying it "reflects the resilience of the U.S. economy." She drew a clear line, stating, "(The rise in interest rates) is an international phenomenon occurring mainly among advanced countries, reflecting people's expectations of the flexibility of the U.S. economy, not a sign of recession." Referring to the U.S. GDP growth rate for the third quarter announced that day, she said, "The strong pace of economic expansion can be read as a sign of a soft landing where rate hikes do not cause a recession and the 2% inflation target can be achieved."

On the same day, the U.S. Department of Commerce announced that the GDP growth rate recorded an annualized 4.9%. This is the highest growth rate since the 7.0% growth in the fourth quarter of 2021 due to the base effect after the pandemic. It exceeded market forecasts (Bloomberg 4.3%, Dow Jones 4.7%) and surged compared to the previous quarter (2.1%). U.S. GDP is announced three times: preliminary, revised, and final figures. Regarding this, President Biden said, "I have never believed that controlling inflation requires a recession, and I see the U.S. economy continuing to grow even after inflation has eased," emphasizing, "It is an indicator showing the flexibility of U.S. consumers and workers supported by Bidenomics."

Optimistic Economic Outlook... Wall Street Expresses Concerns

Secretary Yellen stated that the war between Israel and the Palestinian militant group Hamas has little impact. She responded, "Of course, there would be additional effects if the conflict escalates, but for now, it is premature to jump ahead." Regarding the re-freezing of Iran's oil export payments, which were pointed to as backing Hamas, she added, "The funds frozen in a Korean bank were being transferred to Qatar and then to Iran, and the funds remain unchanged."

On U.S.-China relations, she said, "The U.S. has been overly dependent on China in areas such as clean energy," adding, "This is a field where compromise is difficult from a national security perspective, and export controls and investment restrictions will continue in this regard." However, reaffirming the U.S. government's principle of narrowly limiting the scope of sanctions due to their direct connection to security, she said, "There is absolutely no intention to harm China's economic growth."

Meanwhile, despite the optimistic outlook from U.S. government officials, concerns about the economy in the fourth quarter persist on Wall Street. Despite accumulated tightening, persistently high inflation, depletion of excess savings since the pandemic, and soaring credit card delinquency rates are seen as negative factors for the future economy. High interest rates lead to increased borrowing costs for mortgages, credit cards, car purchases, and corporate loans, which could further increase downward pressure on the economy. The Wall Street Journal (WSJ) warned that "the economy's resilience will soon be put to the test," signaling the possibility of an economic slowdown.

Recently, Wall Street heavyweights have also warned to prepare for the shock of economic deterioration. Ray Dalio, CEO of Bridgewater Associates, described the global economic outlook for next year as "pessimistic." Bill Gross, known as the "Bond King," pointed out recent collapses of regional banks and rising auto loan delinquency rates on X, predicting "a recession in the fourth quarter."

This content was produced with the assistance of AI translation services.