Scott Bessent, founder and CEO of Key Square Group LP, was interviewed in Washington, DC, United States, Friday, June 7, 2024.
Stephanie Reynolds | Bloomberg | Getty Images
U.S. stocks appeared to welcome President-elect Donald Trump’s Treasury secretary nominee, who told CNBC earlier this month that he expected an era of strong growth and lower inflation ahead.
Stock market futures rise Trump announced Friday night Would choose Scott BessantA familiar Wall Street figure will assume the most important economic role in his administration.
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 as the Trump administration needs to stay on the sidelines of the bond markets if it is to successfully advance its agenda,” CEO Sarah Bianchi said. international political affairs and public policy strategists and other Evercore ISI colleagues wrote in a report.
Bianchi added that the market “couldn’t do better than Bessant”.
Markets have been mostly positive since Trump’s victory earlier this month, when he also launched a red wave that swung the Senate to the Republicans and retained Republican control of the House of Representatives, despite volatility. In particular, bond yields have risen, a move some have interpreted as Inflation expected to rise again Others see it as traders pricing in stronger growth.
10-Year Treasury Bond
In a CNBC interview Before announcing his nomination the day after Trump’s victory, Bessant said he expected the new president’s agenda would 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 gross domestic product (less than half its current level ), 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 longtime 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 that there might be some trouble on the political left, saying in a statement over the weekend that Bessant’s “expertise is helping wealthy investors make more money.” 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 for confirmation” and join current Sen. Marcos, whom Trump intends to nominate as secretary of state. ·Marco Rubio, “a moderate.” Cabinet, with the support of both parties. “
Raymond James Washington policy analyst Ed Mills writes that as Trump pursues an aggressive trade agenda, Bessant “could challenge Commerce Secretary nominee Howard Lutte Nick serves as an important check and balance.”
“The more President Trump’s agenda is delivered through economic growth rather than deep budget cuts, we expect markets to view that as a positive,” Mills said.
