(Bloomberg) — Hedge fund chief Scott Bessent’s nomination on Friday to become U.S. Treasury secretary offers bond investors a glimpse into the new administration’s sweeping economic agenda after an extensive search involving several prominent candidates.
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The $28 trillion U.S. Treasury bond market was already closed this week when Bessent, which runs the macro hedge fund Key Square Group, was officially nominated by President-elect Donald Trump. Until trading resumes early in the Asian Monday session, investors and strategists are waiting for more details on Bessent’s view on fiscal policy and his next steps.
Here’s what investors and strategists on Wall Street are saying:
Glen Capelo, who spent more than 30 years on the bond trading desks of Wall Street and is now a managing director at Mischler Financial Group
“Scott is a budget hawk and he will certainly be positive for the economy and markets overall.”
“He wants to rein in spending. Bessent wants to bring the Minister of Finance back in line with the markets.” The essence of the tariff policy under Bessent is that companies can have a certain amount of time to ensure they fuel the U.S. economy or face tariffs, Capelo said.
“It’s not the sky-is-falling-inflation rate philosophy that many are talking about. So I think it will be great for America.”
John Fagan, director at Markets Policy Partners
Fagan, who led the U.S. Treasury Department’s market monitoring group from 2014 to 2018, said Bessent’s past comments and views will change once he faces the reality of the role of Treasury secretary. “When people are in the markets, their commentary on the markets is indelibly colored by what their book is.”
However, “when decisions are made about issuing government bonds, they are decisions of extremely high consequence, made with large groups of people around the table and with enormous amounts of data and considerations that in reality arise from the stable and predictable.”
Priya Misra, portfolio manager at JPMorgan Asset Management
“While the Minister of Finance ultimately implements the government’s fiscal policies, I am encouraged that the person responsible is very familiar with the markets.”
“Bessent has talked about a phased approach to tariffs and has spoken out about the need to keep the deficit under control. It suggests that Bessent wants to avoid a market reaction that would limit the government’s trade and fiscal policy objectives.”