Hedge fund chief Scott Bessent’s Friday nomination to become the US Treasury Secretary is offering bond investors a glimpse into the incoming administration’s sweeping economic agenda after an extended search that included multiple prominent contenders.
The $28 trillion market for US Treasuries was already closed for the week when Bessent, who runs macro hedge fund Key Square Group, was officially nominated by President-elect Donald Trump. Until trading resumes early in Asia’s Monday session, investors and strategists are awaiting more details on Bessent’s views on fiscal policy and his next steps.
Here’s what investors and strategists on Wall Street are saying:
Glen Capelo, who spent more than three decades on Wall Street bond-trading desks and is now a managing director at Mischler Financial Group: “Scott is a fiscal hawk and he definitely will be positive overall for the economy and the markets.”
“He wants to rein in spending. Bessent wants to get the Secretary of the Treasury back in line with the markets.” The gist of tariff policy under Bessent is that companies may have a certain amount of time to ensure they are fueling the US economy or else face tariffs, Capelo said. “It’s not the sky-is-falling inflation-is-coming tariff philosophy that many talk about. So I think it’s going to be great for America.”
John Fagan, principal at Markets Policy Partners: Fagan, who ran the US Treasury’s markets monitoring group from 2014 to 2018, said Bessent’s past comments and views stand to shift once he’s faced with the reality of the Treasury secretary role. “When people are in the markets, their commentary on markets is indelibly tinged by what their book is.” However, “when decisions are made about Treasury issuance, those are extremely consequential decisions that are made with large groups of people around the table and enormous amounts of data and considerations that really spring from the stable and predictable.”
Priya Misra, a portfolio manager at JPMorgan Asset Management: “While the Treasury Secretary ultimately implements the administration’s fiscal policy, I’m encouraged that the person in charge is very familiar with markets.”
“Bessent has talked about a phased-in approach to tariffs and has been vocal about the need to control the deficit. It suggests that Bessent wants to prevent a market reaction that would constrain the administration’s goals on trade and fiscal policy.”
“The one area that there may be some concerns would be his comments on a ‘Shadow Fed Chair’ but I think he is aware that an independent central bank is a key reason for the US dollar being a reserve currency and US Treasuries being a safe haven. I do think that the administration might comment on monetary policy, but the Fed will remain focused on its dual mandate.”
Zachary Griffiths, head of US investment grade and macro strategy at CreditSights: “Having a macro hedge fund guy feels like a good thing for markets — someone who understands how that side works is good.”
“To me, his views related to the Fed – to somehow create a lame duck Chairman Powell — is a little concerning. I know Bessent has since sort of withdrawn that recommendation he had made. But that is the one thing that sticks out to me.” That risk “keeps that overhang of that potential volatility-inducing event in play if they were to take a more unorthodox approach to the relationship with the Fed.”
Andrew Brenner, head of international fixed income at NatAlliance Securities: “He’s been Trump’s economic adviser for a good period of time, and I think he understands Trump.”
“Under Bessent at Treasury, and with Trump, I don’t think they are going to try to undermine the independence of the Fed.”
Ed Al-Hussainy, a strategist at Columbia Threadneedle: “I don’t expect the Treasury secretary to have an ambitious independent agenda.”
“The Treasury secretary will have three tasks ahead of him. First, shape the scale and scope of the fiscal response in the next recession. Two, determine the maturity structure of the Treasury debt as borrowing rises next year. Three, potentially have a voice in the tax policy negotiation next year.”
Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities: “The process was long and thoughtful. Bessent is a great pick. He understands global markets, which is critical for this role. And the markets have confidence in him.”
