Scott Bessent, founder and chief executive officer of Key Square Group LP, during an interview in Washington, DC, US, on Friday, June 7, 2024.
Stefani Reynolds | Bloomberg | Getty Images
The U.S. stock market appeared to cheer President-elect Donald Trump’s presumptive nominee for Treasury secretary, who told CNBC earlier this month that he sees an era of strong growth and lower inflation ahead.
Stock market futures rose and Treasury yields tumbled early Monday following the announcement late Friday that Trump would pick Scott Bessent, a familiar Wall Street figure, to take on his administration’s most important economic role.
The move sent a message that Trump wants someone with strong market credentials as well as a similar philosophy for the role.
“This pick should please markets given Bessent’s in-depth understanding of financial markets and the economy – in particular the bond market the Trump administration will need to keep on [its] side if it is to advance its agenda successfully,” Sarah Bianchi, chief strategist of international political affairs and public policy and other colleagues at Evercore ISI wrote in a note.
Bianchi added that markets “couldn’t have done much better” than Bessent.
Since Trump’s victory earlier this month, in which he also carried a red wave that flipped the Senate to Republicans and retained GOP control of the House, markets have been mostly positive albeit volatile. In particular, bond yields have scaled higher, with some interpreting the move as anticipating another leg up for inflation while others see it as traders pricing in stronger growth.
10-year Treasury
In a CNBC interview the day after Trump’s victory, and before the announcement that he would be nominated, Bessent said he expected the new president’s agenda to help bring down inflation while simultaneously stimulating growth.
“The one thing he doesn’t want is a replay of what we’ve just got under Biden-Harris,” Bessent 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 geared toward a growth impetus.”
Though some investors worry that the tariffs Trump has talked about implementing could cause inflation, Bessent said he favors that they be “layered in” so as not to cause anything more than short-term adjustments.
“If you take that price adjustment coupled with all the other disinflationary things President Trump is talking about, we’re going to be at or below the 2% inflation target” that the Federal Reserve prefers, he said.
Moving in threes
Bessent favors a three-pronged approach that addresses worries over the ballooning national debt and deficits: growing the economy at a 3% rate, knocking down the budget deficit to 3% of gross domestic product — less than half where it stands now — and adding three million barrels a day in oil production.
Wall Street commentary 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’s perception of a ‘Trump put’ — that is, the incoming White House wants equities to perform well,” Lee wrote.
Early indications are that Bessent, who had a long history of supporting Democratic causes before backing Trump during his first run in 2016, should face little trouble getting confirmed.
Sen. Elizabeth Warren (D-Mass.) signaled perhaps some trouble from the political left, saying in a statement over the weekend that Bessent’s “expertise is helping rich investors make more money, not cutting costs for families squeezed by corporate profiteering … I do not know if Mr. Bessent will transfer his loyalty from Wall Street investors to America’s 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 to confirmation” and would join current Sen. Marco Rubio, whom Trump intends to nominate as secretary of State, “in the moderate wing of the Cabinet, with support in both parties.”
Bessent “could play could play an important counterbalance to Commerce Secretary nominee, Howard Lutnick, as Trump pursues an aggressive trade agenda,” wrote Ed Mills, Washington policy analyst at Raymond James.
“The more President Trump’s agenda can be achieved through economic growth versus significant budget cuts, we would expect the market to view that as a positive,” Mills said.
Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago, speaks to the Economic Club of New York in New York City, U.S., April 10, 2025.
Brendan McDermid | Reuters
Business owners and CEOs are already stocking up on inventory, and some American shoppers are panic buying big-ticket items in anticipation of President Donald Trump’s tariffs. The sudden buying binge could cause an “artificially high” level of economic activity, said Federal Reserve Bank of Chicago President Austan Goolsbee.
“That kind of preemptive purchasing is probably even more pronounced on the business side,” Goolsbee told CBS’ “Face The Nation” on Sunday, adding: “We heard a lot about preemptive building-up of inventories that could last 60 days, 90 days, if there [was] going to be more uncertainty.”
Businesses stockpiling inventory and consumers accelerating their purchasing decisions — buying an Apple iPhone now, say, rather than waiting until the fall — may inflate U.S. economic activity in April and lead to a slowdown in the coming months, Goolsbee suggested.
“Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all,” he said.
Sectors affected by Trump’s tariffs, particularly the auto industry, are most likely to heavily stock up on inventory now before import levies on goods from other countries potentially rise further, said Goolsbee. Many car parts, electronic components and other big-ticket consumer items are manufactured in China, for example, which currently faces a 145% total tariff rate on goods imported to the United States.
“We don’t know, 90 days from now, when they’ve revisited the tariffs, we don’t know how big they’re going to be,” Goolsbee said.
Some U.S. business owners who buy goods manufactured in China say they already can’t afford to place rush orders on inventory. Matt Rollens, owner and CEO of Granite Bay, California-based novelty drinkware company Dragon Glassware, says he’s temporarily holding his products in China because paying the 145% levy would force him to raise consumer prices by at least 50%, likely drying up customer demand.
Rollens has enough inventory in the U.S. to last roughly until June, and hopes the tariffs will be rolled back by then, he told CNBC Make It on April 11.
Short-term uncertainty and financial pain aside, the Fed’s Goolsbee expressed optimism about the country’s longer-term economic outlook.
“If we can get through this, it’s important to remember: The hard data coming into April was pretty good. The unemployment rate [was] around steady full employment, inflation [was] coming down,” he said. “It’s just a desire of people expressing they don’t want to back to ’21 and ’22, at a time when inflation was really raging out of control.”
IN HIS LOVE of lucre Donald Trump can be crass. In their pursuit of efficiency, free marketeers can be, too. Consider the sale of citizenship. Most people dislike the idea of treating national belonging as a commodity. Yet about a dozen countries hawk passports and more than 60, including America, offer residency in exchange for an investment or donation. Its “golden-visa” scheme is cumbersome, under-priced and inefficient. On this point the president and the market agree.