Markets applaud Bessent’s credentials to lead Trump’s Treasury Department

The U.S. stock market appeared to applaud President-elect Donald Trump’s presumptive nominee for Treasury secretary, who told CNBC in early November that he sees an era of strong growth and lower inflation ahead.

Stock market futures rose and Treasury yields fell early Monday following Friday night’s announcement that Trump would tap Scott Bessent, a familiar Wall Street figure, to take on the top economic role. of his administration.

The move sent the message that Trump wants someone with strong market credentials as well as a similar philosophy for the job.

“This choice should please the markets, given Bessent’s deep knowledge of financial markets and the economy, particularly the bond market that the Trump administration will need to maintain.” [its] if he wants to successfully advance his agenda,” Sarah Bianchi, chief international political affairs and public policy strategist at Evercore ISI, and her colleagues wrote in a note.

Bianchi added that the markets “couldn’t have done much better” than Bessent.

Since Trump’s victory earlier this month, which also sparked a red wave that flipped the Senate to Republicans and retained GOP control of the House, markets have been mostly positive, if volatile. . In particular, bond yields have risen: some interpret the move as anticipation of another rise in inflation, while others see it as a sign that traders are pricing in stronger growth.

In an interview with CNBC the day after Trump’s victory, and before his nomination was announced, Bessent said he hoped the new president’s agenda would help reduce inflation while spurring growth.

“The only thing he doesn’t want is a repeat of what we just went through with Biden-Harris,” Bessent said.

“President Trump has 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 we’re seeing is a healthy move toward boosting growth.”

Although some investors are concerned that the tariffs Trump has talked about implementing could cause inflation, Bessent said he favors them being “escalated” so as not to cause anything more than short-term adjustments.

“If you take that price adjustment along with all the other disinflationary things that President Trump talks about, we will be at or below the 2% inflation target” that the Federal Reserve prefers, he said.

Bessent favors a three-pronged approach that addresses concerns about rising national debt and deficits: grow the economy at a 3% rate, reduce the budget deficit to 3% of gross domestic product (less than half of what that it is now) and add three million barrels a day of oil production.

Feedback from Wall Street was almost universally positive.

Perpetual market bull Tom Lee, head of research at Fundstrat Global Advisors, noted that “Bessent lends substantial economic and market credibility to the incoming cabinet.”

“In our view, this reinforces the market perception of a ‘Trump sell’; that is, the incoming White House wants the stock to perform well,” Lee wrote.

Early indications are that Bessent, who had a long history of supporting Democratic causes before endorsing Trump during his first campaign in 2016, should have no problem being confirmed.

Sen. Elizabeth Warren, D-Mass., perhaps pointed to some problems on the political left, saying in a statement over the weekend that Bessent’s “experience is helping wealthy investors make more money, not cutting costs.” for families squeezed by corporate profits…I don’t know if Mr. Bessent will transfer his loyalty from Wall Street investors to American workers, but I am 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 Bessent should “sail toward confirmation” and would join incumbent Sen. Marco Rubio, whom Trump intends to nominate as secretary of state. “in the moderate wing of the Cabinet, with support from both parties.”

Bessent “could play an important counterweight to Commerce Secretary nominee Howard Lutnick as Trump pursues an aggressive trade agenda,” wrote Ed Mills, a policy analyst at Raymond James in Washington.

“The more President Trump’s agenda can be achieved through economic growth versus significant budget cuts, we would expect the market to see that as a positive,” Mills said.