Equities and Treasuries saw positive movement on Monday, fueled by investor optimism following President-elect Donald Trump’s selection of Scott Bessent for Treasury Secretary. Traders viewed the choice as a sign of greater economic stability, which helped buoy global financial markets.
Asian stocks climbed approximately 1%, with Japan, South Korea, and Australia leading the charge. US futures also edged up. Meanwhile, the yield on 10-year US Treasuries fell by five basis points to 4.35%, signaling investor confidence. The dollar weakened, and Bitcoin bounced back from its weekend slump.
Bessent, the head of macro hedge fund Key Square Group, has expressed support for Trump’s tariff and tax-cut policies. However, investors expect Bessent to focus more on ensuring economic stability and less on the president-elect’s more politically charged initiatives. This outlook has alleviated fears of protectionist measures, which had the potential to drive inflation, escalate trade tensions, and increase market volatility.
The initial excitement over Trump’s aggressive fiscal agenda—characterized by a stronger dollar and rising Bitcoin prices—appears to be waning as traders adjust their expectations. Many are recalibrating their positions, anticipating that the administration may prioritize stability over bold economic shifts, such as escalating tariffs.
“Bessent is viewed as a relatively conventional pick, which suggests more moderate policy shifts than some of the other names under consideration,” said Rob Carnell, Head of Research and Chief Economist for Asia Pacific at ING Groep NV. In response, traders have been trimming their bets on the dollar, particularly after its recent rally. The Bloomberg Dollar Index dropped sharply, marking its largest decline in over two weeks, with the Japanese yen leading the currency gains.
The dollar had surged for eight consecutive weeks prior to this pullback, driven by expectations of continued economic growth under Trump’s fiscal policies. However, traders are now reducing their positions ahead of key US inflation data and the Federal Reserve’s upcoming meeting, which could provide more clarity on future interest rate hikes.
Chinese equities diverged from the positive regional trend, as investor sentiment remained dampened by the lack of stronger fiscal measures to stimulate the country’s economy. The Chinese government’s recent decision to leave its policy loan rate unchanged, following a previous cut in September, has not been enough to reassure market participants about the outlook for the world’s second-largest economy.
Overall, while Bessent’s nomination has provided a measure of stability to US markets, global investor sentiment remains mixed, with key economic data and future policy actions expected to drive the next phase of market movements.
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