By Davide Barbuscia
(Reuters) – President-elect Donald Trump’s choice of Scott Bessent as Treasury secretary could lift some of the gloom that has enveloped the slumping U.S. Treasury market in recent weeks, investors said.
Trump said Friday he had chosen Bessent, a prominent investor, as Treasury secretary, a key Cabinet position with enormous influence over economic, regulatory and international affairs.
The selection comes after days of speculation weighing on Treasury markets already dogged by concerns about a possible rebound in inflation and a rise in the federal budget deficit due to Trump’s economic plans such as tax cuts and tariffs.
U.S. 10-year yields, which move inversely to bond prices, are hovering around a five-month high after a weeks-long sell-off in government bonds. Uncertainty over who would fill the role of the Treasury Department has contributed to the sell-off in recent days, investors said.
“This is the big thing everyone has been waiting for,” said Michael Purves, CEO of Tallbacken Capital Advisors in New York. “There was some fear that Trump would pick someone who was no good or some sort of absolute tariff fanatic, so this is a very good answer for Wall Street.”
The Treasury Secretary oversees U.S. economic and fiscal policy, and Trump’s nominee will be charged with implementing his plans. As a result, the investment community, from global bond traders to US corporate financiers, is keenly interested in his preferred economic views and the kind of advice they will give Trump behind closed doors.
“The great thing about this nomination is that Bessent is fiscally conservative,” said Joe McCann, founder and CEO of cryptocurrency fund Assymetric.
“Since the election, 30-year bond yields have risen on expectations that Donald Trump will lead to bigger deficits,” he said. “This now paves the way for greater fiscal discipline, which the market will really welcome.”
Bessent, who did not immediately respond to a request for comment, has advocated tax reform and deregulation, especially to spur more bank lending and energy production, as noted in a recent op-ed he wrote for The Wall Street Journal.
Christopher Hodge, US economist at Natixis, hopes Bessent can present a market-oriented perspective that could reduce the chances of extreme tariffs or a trade war.
Trump has floated the idea of imposing a 60% tariff on Chinese goods and a levy of at least 10% on all other imports.
“Someone who is well attuned to the market will be able to convey the potential risks,” said Hodge.