Concerns about the international appeal of dollar-based assets materialised last month during a selloff in US stocks in the wake of Trump’s announcement of steep reciprocal tariffs on major trading partners. Contrary to typical practice, US Treasuries also tumbled — failing to play the haven asset role it has in the past. The dollar also retreated.
Bessent’s predecessor, Janet Yellen, had said the pattern suggested a worrisome “loss of confidence in US economic policy.”
But Bessent assured that, while the current period of negotiations with US trading partners is “not always a pleasant process,” it will conclude with strengthened trade ties, and “our security and values ties will still be there.” Speaking later on CNBC, he reiterated the administration’s message that it’s “very close” to some deals on trade, with some agreements possible as early as this week.
GDP outlook
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The Treasury chief also said that “we can get growth closer to something that looks like 3%.” Asked how long that might take he said, “by this time next year.” That timeline is in contrast to projections by the Congressional Budget Office that are below 2%. Making Trump’s 2017 tax cuts permanent and implementing deregulation will stoke a rebound in economic expansion, he said — speaking days after data showed a contraction in gross domestic product last quarter.
Bessent told the audience at the annual investment confab that that Trump’s policies are “interlocking parts of an engine,” which will drive long-term investment in the US. The aim is to return to the “non-inflationary growth” experienced in the first Trump administration, he also said.
In highlighting the US appeal to investors around the world Monday, Bessent’s remarks Monday offered something of a contrast with previous emphasis on “Main Street” America. Both “Main Street” and “Wall Street” can prosper under Trump’s policies, he said at the Milken event. Last month, at a gathering of financial professionals in Washington, Bessent had emphasised that it was “Main Street’s turn.”
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Bessent reiterated that his focus is on 10-year Treasury yields, rather than the Federal Reserve’s overnight benchmark interest rate. When Michael Milken, the junk-bond pioneer hosting the conference, noted that he had a phone app that sent him alerts when US Treasuries prices “change by more than 2% in two hours,” Bessent quipped, “Please don’t share that with the president.”
A former hedge-fund manager, Bessent reprised his explanation for entering public service, saying he’d been motivated to address the current historically large federal borrowing burden. “Back to your initial question, ‘Why am I sitting here,’ is to take away the credit risk of the US government, then I think rates will naturally come down.”
