Treasury Secretary Janet Yellen tries to calm markets amid historic US bond collapse

• Treasury Secretary Janet Yellen tried to calm markets amid a massive US bond rout.
• She told the Financial Times she sees no "evidence of market dysfunction" after the spike in yields.
• Last week's jobs data was "impressive" but not a sign of an overheating labor market, Yellen added.

US Treasury Secretary Janet Yellen said there's nothing unusual in how the market has reacted to surging borrowing costs.

On the sidelines of the IMF and World Bank annual meetings in Marrakech this week, she told the Financial Times that she had no concerns about the recent sell-off in Treasury bonds that sent yields to their highest levels since 2007.

"I haven't seen any evidence of dysfunction in connection with the increase in interest rates," Yellen said Monday. "When rates are more volatile, sometimes you see some impact on market function, but that is pretty standard."

The comments come amid the worst bond bear market in US history, according to a research note published by Bank of America on Friday.

In fact, long-dated Treasurys have lost 46% since March 2020, with the 30-year bond down 53%, according to Bloomberg data.

Last week's blowout jobs report sent the 10-year Treasury spiking to 4.9% intraday on Friday before it pulled back later. The hot jobs data hinted at a re-accelerating US economy, incentivizing the Fed to hike benchmark rates further.

Yellen remarked to the FT on Monday that the jobs numbers were impressive, but not a sign of a torrid labor market.

"What could be a problem is if we saw the labor market overheating, but I didn't really see evidence here of that," she said.

Yellen also said she is not concerned about a repeat of this spring's bank failures, which were triggered by rising rates, saying that credit quality overall was "very solid."

Vulnerable banks have reduced the risk of a bank run by tapering their uninsured deposits. Meanwhile, borrowers appear to be weathering higher rates.

"[With] the rate rise in and of itself, it's not obvious that it is putting a huge amount of pressure on households or businesses," she added.