Wall Street applauds Donald Trump’s selection of Scott Bessent as Treasury Secretary

Scott Bessent sat immediately to the left of Donald Trump as the then-presidential candidate presented his economic agenda to many senior Wall Street figures at the Economic Club of New York in September.

After being nominated for the top job at the US Treasury, Bessent will now step into the spotlight as the most important economic official in the US government. Trump management.

Trump’s decision to hire the hedge fund manager comes after a tumultuous fight for the Treasury position that saw the president-elect expand the search 11 minutes into the fight Fierce internal affairs between Bessent’s faction and another leading candidate, billionaire investor Howard Lutnick.

Lutnick, who is helping staff the cabinet, is in the interim was selected as commercial secretary with oversight by the U.S. Trade Representative’s office — an important role but not the Treasury’s real prize.

billionaire Marc Rowan of Apollo Global Management and former Federal Reserve governor Kevin Warsh also disputed in the final days before the announcement, as did Tennessee Sen. Bill Hagerty.

In choosing Bessent, Trump broke the pattern that has shaped his other high-level Cabinet picks.

Those nominations bucked orthodoxy — and sparked controversy. On Thursday, one of them, former congressman Matt Gaetz, withdrew his nomination for the attorney general after horrific headlines about his private life.

Rather, Bessent, who runs Key Square Capital Management, is seen across Wall Street and Washington as a pragmatic choice who is well-placed to manage the enormous responsibilities of such a high-profile job.

“In choosing someone who essentially could have been Treasury Secretary in a normal Republican administration, there is a sigh of relief because at least there will be an economically mature person in the room.” .

Jason Furman, a Harvard professor and former White House economic adviser, described Bessent as a “credible Treasury secretary who has a real understanding of the global economy.”

Steve Moore, an economist close to Trump who speaks with Bessent weekly, described him as a “financial markets genius” and a “renaissance man” thanks to his deep knowledge of economic and financial issues.

Jens Nordvig, who signed Bessent as his first client when he founded Exante Data, described the hedge fund manager as a “moderate communicator rather than a loose cannon loose”.

“I think that is an advantage as Finance Minister,” he added.

If confirmed by the Senate, Bessent will have many challenges to tackle, including pushing for steep tax cuts under the law, communicating with unsettled trading partners in tariff negotiations and deal with the economic fallout if Trump follows through on his pledge to deport immigrants. public.

“When you look at what’s going to happen with Bessent – selling Congress with huge debt and expanding deficits, dealing with the Fed that could be under Trump’s direction, dealing with the super strong dollar while White House noise and trade groups call for devaluation, and Mark Sobel, a former Treasury official, said: maintaining the semblance of an economic relationship with China amid hawks everywhere everywhere – it was not a delicious meal.

Featured in this work is the $27 trillion Treasury market – the world’s largest and most important bond market – which Bessent will be tasked with overseeing.

According to recent estimates, Trump’s plans are expected to add up to $15 trillion to the country’s debt over the next decade, while also causing inflation.

That could mean the Fed has less room to cut interest rates as it fights new price pressures, potentially causing conflict with chairman Jay Powell, who angered Trump in office. first period for ignoring requests to reduce interest rates faster.

“As debt grows and interest rate pressure increases, the Fed should not fight that,” said Steven Kamin, who once ran the international finance department at the central bank.

Interest payments cost the federal government nearly $900 billion a year, the second-largest expense after Social Security. Mahmood Pradhan, head of global macro at Amundi Investment Institute, said it was “a domestic political issue that needs to be resolved”.

However, the overriding fear is that Trump will more directly infringe on the Fed’s independence in his second term in the White House, by seeking to oust Powell before his term ends in September. 5 in 2026 or nominate a new chair that is easier to influence when the Fed’s term ends. chair opens.

Steven Mnuchin, Trump’s first and only Treasury Secretary from Goldman Sachs, was instrumental in reassuring financial markets that Powell’s job was safe despite threats from the then-president hours – what Wall Street will demand of Bessent.

“I think we should expect President Trump to try to use leverage to force the Fed to do what he wants,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “The problem facing the next Treasurer is how to handle that and whether to follow suit or whether to try to counter those impulses.”

Bessent rejected the unorthodox proposal for a “shadow” Fed chairman who would have been widely recognized as Powell’s successor long before he was due to step down and might have shared Views can be conflicting on the economic outlook. Wall Street veterans warn that the prospect of media chaos will severely disrupt financial markets.

Jason Trennert, who has known Bessent for 20 years as head of the economic and market analysis firm Strategas Research Partners, said he did not expect Bessent to be a “pushy pushover” or a “the weak”. “He will be a strong voice for what he believes is right.”

The day-to-day responsibility of managing more than 100,000 employees in the department would be a huge undertaking in itself, especially for someone who has never held a government position before.

Aaron Klein, who previously served as deputy assistant secretary for economic policy at the Treasury Department, said it was important for Bessent to attract experienced deputies for “the art of running an agency.” Government is very different from making deals on Wall Street.”

He added: “If you have never worked in government and taken on one of the most senior positions, you better get someone who knows how to manage a government agency near you, otherwise the swamp could swallow you whole.” .