Scott Bessent, founder and CEO of Key Square Group LP, was interviewed in Washington, DC, the United States, on Friday, June 7, 2024.
Stephanie Reynolds | Bloomberg | Getty Images
U.S. stocks appeared to welcome President-elect Trump’s Treasury secretary nominee, who told CNBC earlier this month that he expected an era of strong growth and lower inflation ahead.
Stock futures rose early Monday and Treasury yields plummeted after Trump announced late Friday that he would pick Scott Bessent, a prominent Wall Street figure, to fill his administration’s most important economic role.
The move sends a message that Trump wants to appoint someone to the position with strong market credentials and similar philosophies.
“Given Bessant’s deep knowledge of financial markets and the economy, this choice should please markets, especially since the Trump administration needs to stay on the sidelines of the bond markets if it is to successfully advance its agenda,” CEO Sarah Sarah Bianchi said.
Bianchi added that the market “couldn’t do better than Bessant”.
Since Trump’s victory earlier this month, he also launched a red wave that flipped the Senate to the Republicans and retained Republican control of the House of Representatives, with markets mostly positive despite volatility. In particular, bond yields have moved higher, a move that some interpreted as expectations that inflation will rise again, while others saw it as traders pricing in stronger growth.
10-Year Treasury Bond
In an interview with CNBC the day after Trump’s victory and before his nomination was announced, Bessant said he expected the new president’s agenda to help lower inflation while stimulating economic growth.
“The one thing he doesn’t want to happen is a repeat of what we just had under Biden-Harris,” Bessant said.
“President Trump has some very good ideas, but I guarantee you, the last thing he wants is to cause inflation,” he added. “I don’t think the bond market is worried about Trump 2.0 inflation. I think what you’re seeing is a healthy move to drive growth.”
While some investors worry that Trump’s imposition of tariffs could lead to inflation, Bessant said he favors “layering” tariffs to avoid any consequences beyond short-term adjustments.
“If you combine price adjustments with all the other deflationary policies President Trump has talked about, we will be at or below the Fed’s preferred 2% inflation target,” he said.
Three people marching
Bessant favors a three-pronged approach to address concerns about the ballooning national debt and deficit: grow the economy at 3% and reduce the budget deficit to 3% of GDP, less than half of current levels ), and increase oil production by three million barrels per day.
Reviews on Wall Street were almost universally positive.
“Bessent provides tremendous economic and market credibility to the incoming cabinet,” noted Forever Market Bull Tom Lee, head of research at Fundstrat Global Advisors.
“We believe this reinforces the market’s ‘Trump bearish’ view – that is, the incoming White House wants stocks to do well,” Lee wrote.
Early indications are that Bessant, a long-time supporter of Democratic causes before endorsing Trump during his first campaign in 2016, should have little difficulty securing the nomination.
Sen. Elizabeth Warren, D-Mass., hinted at some trouble on the political left, saying in a statement over the weekend that Bessant’s “expertise is helping wealthy investors make more money.” , rather than cutting costs for families squeezed by corporate profiteering… I don’t know if Mr. Bessant will shift his allegiance from Wall Street investors to American workers, but I’m willing to work with anyone, to advance the interests of working families.
However, Washington policy expert Greg Valliere, chief U.S. policy strategist at AGF Investments, said Bessant should “sail on confirmation” and join current Sen. Marco Valliere, whom Trump intends to nominate as secretary of state. Marco Rubio, “a moderate.”
Ed Mills, a Washington policy analyst at Raymond James, wrote that Bessant “could play an important role in influencing Commerce Secretary nominee Howard Lutnick as Trump pursues an aggressive trade agenda.” “Checks and balances.”
“The more President Trump’s agenda is delivered through economic growth rather than drastic budget cuts, we expect the market to view that as a positive,” Mills said.
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