By Sam Goldfarb
Bond investors are cheering Donald Trump's pick of Scott Bessent to lead the Treasury Department. Why?
Bessent favors typical Republican priorities of low taxes and less regulation. But what investors seem to like the most is the impression he has given of being a safe pair of hands who might temper the president-elect's most populist impulses.
"The bond-friendly logic is relatively straightforward and maintains that Bessent will keep a leash on deficits and take a thoughtful approach to tariffs," Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, said.
Treasurys staged a major rally Monday, driving down yields-unlike what happened when Trump won the election earlier this month, when stocks surged and yields rose.
That is a strong signal the nomination has made investors less worried about populist policies-from budget-busting tax cuts to tariffs-that could drive up inflation, which is a major threat to bonds.
The dollar, meanwhile, weakened against peers such as the euro. That could be partly down to lower yields, but may also be another sign that investors have turned more hopeful on tariffs.
Since the election, the dollar has strengthened in part because many investors think higher and broader U.S. tariffs would hurt other economies even more than they would slow U.S. growth. Monday's move suggests traders were scaling back those bets, at least a little.
This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).
(END) Dow Jones Newswires
November 25, 2024 11:09 ET (16:09 GMT)
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