Investors see Treasury’s Bessent pick as easing US bond market worries By Reuters
(This Nov. 22 story has been corrected to correct Asymmetric spelling in section 7)
Written by David Barbuscia
(Reuters) – President-elect Donald Trump’s nomination of Scott Bessent as Treasury secretary could lift the gloom that has gripped the US government bond market in recent weeks, investors said.
Trump said on Friday that he had chosen Bessent, a prominent investor, as Treasury secretary, a key cabinet position with a major impact on economic, legal and international affairs.
The election comes after days of speculation that weighed on Treasury markets, which have been weighed down by concerns about possible inflation and an increase in the federal budget deficit from Trump’s economic plans such as tax cuts and import tariffs.
The average 10-year US yield, which moves inversely with bond prices, rose to near a five-month high following a weeks-long sell-off in Treasuries. Uncertainty over who will take over the Treasury role has added to the selloff in recent days, investors said.
“This is the big thing that everyone has been waiting for,” said Michael Purves, CEO of Tallbacken Capital Advisors in New York. “There was a certain amount of concern that Trump was going to pick the wrong person or some kind of tax fanatic, so this is a very good response for Wall Street.”
The Secretary of the Treasury Department is responsible for America’s economic and tax policy, and Trump’s nominee will be tasked with carrying out his plans. As a result, the investment world, from global traders to US corporate treasurers, is very interested in the economic views of the candidate and the type of advice they will give Trump behind closed doors.
“The beauty of this appointment is that Bessent is a fund custodian,” said Joe McCann, founder and CEO of cryptocurrency fund Asymmetric.
“Since the election, the yield on the 30-year bond has risen significantly, as it was expected that Donald Trump would create a bigger deficit,” he said. “Now this sets the stage for more financial behavior, which the market will certainly accept.”
Bessent, who did not immediately respond to a request for comment, has advocated for tax reform and deregulation, particularly to encourage more bank lending and energy production, as noted in a recent opinion piece he wrote for the Wall Street Journal.
Christopher Hodge, a US economist at Natixis, hopes Bessent can present a market-oriented vision that could reduce the chances of capital expenditures or a trade war.
Trump has floated the idea of a 60% tariff on Chinese goods and a minimum 10% tariff on all other imports.
“Someone who is in tune with the markets will be able to convey the potential risk,” Hodge said.
Ed Al-Hussainy, senior interest rate strategist at Columbia Threadneedle, said any new Treasury secretary will be watched by investors who want to know the person’s views on the job’s priorities, from managing the maturity of the US government debt to how the person will be. it can respond to economic downturns or during episodes of global financial turmoil.
“We have a lot of people who are very isolated,” Al-Hussainy said, before the announcement. “So if the next secretary is an isolationist, the financial crisis outside the US is likely to get worse as a result.”
Investors are also focusing on the new administration’s stance on the Federal Reserve’s independence because the central bank’s policy is an important factor in the movement of Treasury prices.
Trump in August said the president should have a “voice” in the Fed’s decisions, and according to media reports, his allies have drafted proposals to end the Fed’s independence.
“I hope the Fed stays independent because that’s good for the bond market,” said Campe Goodman, portfolio manager at Wellington Management Company, early Friday.
