Local time on April 14, former U.S. Treasury Secretary Yellen told CNBC that the recent selling off of U.S. Treasury bonds indicates a "worrying decline" in confidence in U.S. policy-making.

Recently, the so-called "reciprocal tariff" policy of the Trump administration has continued to cause fluctuations in financial markets, and even traditional safe-haven assets like U.S. Treasuries have been sold off.

Yellen said on the 14th that "I don't think this is a sign of market dysfunction, that is, complete drying up of market liquidity, but rather a pattern showing a loss of confidence in U.S. economic policies." She added that such a situation "is indeed very worrying."

Usually, when investors face rising uncertainty in financial markets, they seek safety by buying U.S. Treasuries, leading to a decrease in yields. However, the recent fall in bond prices and sharp rise in yields are unusual phenomena, raising concerns about the potential "collapse" of the U.S. Treasury market.

Yellen also believes that the simultaneous rise in Treasury yields and fall in the dollar are unprecedented, indicating that "investors are starting to shun dollar-denominated assets," and "raising doubts about the safety of U.S. Treasury bonds, which form the cornerstone of the global financial system."

Former U.S. Treasury Secretary Yellen. Bloomberg

Yellen served as chair of the Federal Reserve during the Obama administration and later as treasury secretary in the Biden administration. She stated that if there are indeed risks to financial stability, the Federal Reserve will be able to intervene, but she "hasn't seen" relevant factors at play and "hopes" they won't come into effect.

"The tariff policy and the resulting uncertainty create the most difficult situation for the Fed," Yellen believes that the Fed needs to monitor inflation expectations, while stating that "the Fed will not be inclined to cut interest rates."

In Yellen's view, the risk of an American economic recession has "greatly increased," but "she doesn't want to make hasty predictions."

Yellen then emphasized that "there are assessments suggesting that maintaining tariffs will result in an annual loss of approximately $4,000 per household, which is a significant impact on household income."

The economic policies of the current Trump administration have drawn widespread condemnation both domestically and internationally in the United States. Previously, on the 10th, Yellen criticized that the Trump administration's economic policies were the "most serious self-inflicted harm" she had ever seen.

Former Treasury Secretary Summers also warned that due to the Trump administration's tariff measures, the United States may be heading toward an economic recession, potentially causing about 2 million Americans to lose their jobs and each household to face at least a $5,000 loss in income.

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