Bessent’s mentor and a close associate of Walsh weigh in: U.S. Treasury yields are “even somewhat low,” making interest rate cuts unnecessary.

Wall Street legendary investor Stanley Druckenmiller said at a closed-door meeting in New York that current U.S. borrowing costs are "even a bit low," calling Federal Reserve officials who still view monetary policy as restrictive "absurd" and stating that interest rate cuts are no longer necessary. Druckenmiller is a long-time mentor to U.S. Treasury Secretary Scott Bessent and Federal Reserve Chair Michael Walsh, as well as a close friend of Walsh. He argued that U.S. Treasury yields are not high given the U.S. economic conditions, the capital expenditure boom, and market competition for capital, noting that the recent rise in yields is a slow, fundamentals-driven process that does not concern him. His comments came as the 30-year U.S. Treasury yield briefly climbed to 5.35%, hitting a 2007 high, while the 10-year yield neared 5%. On artificial intelligence, Druckenmiller said Duquesne Capital has generated most of its recent profits from AI investments, but has now reduced its related positions to 20% of their level six months ago. He believes the AI build-out phase may be nearing its later stages, warning that markets need to start exercising caution and that corporate earnings could be in a bubble fueled by the AI investment boom. On foreign exchange, Druckenmiller said he is reluctant to short the U.S. dollar due to America’s clear global edge in AI; he has been shorting the euro and pound sterling since the start of the year, but the positions are far smaller than his previous currency bets.