Yellen Plays Down Inflation Fears Amid Surge in Treasury Yields

Treasury Secretary Janet Yellen played down any concern that the recent surge in U.S. government-bond yields reflects expectations for an outsized breakout in inflation.

“I don’t see that the markets are expecting inflation to rise above” the Federal Reserve’s 2% objective, Yellen said Friday in an interview with PBS NewsHour. “Long-term interest rates have gone up some -- but mainly, I think, because market participants are seeing a stronger recovery.”

Yellen Plays Down Inflation Fears Amid Surge in Treasury Yields

Yields on 10-year Treasuries stabilized Friday after spiking earlier to the highest in more than a year in the wake of a stronger-than-anticipated February employment report.

Yellen Plays Down Inflation Fears Amid Surge in Treasury Yields

Labor Department data showed employers added 379,000 net jobs in February, more than forecast. That dropped the U.S. unemployment rate to 6.2%.

“Although 379,000 jobs sounds like a lot, at that pace it would take us more than two years to get to full employment,” Yellen said. The “real” unemployment rate, after factoring in 4 million who dropped out of the labor force after losing their jobs, was more like 10%, she said.

Asked about critiques that the Biden administration’s $1.9 trillion Covid-19 relief legislation was excessive given the economy’s signs of recovery, Yellen pushed back.

“I think we should want a rapid recovery,” she said. “We have a large number of workers who are long-term unemployed, and we have to make sure they’re not scarred to the point where this pandemic has a permanent impact on their lives.”

The U.S. Senate ground ahead with the bill on Friday, with expected passage over the weekend along strictly partisan lines.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.