The American secretary of the Treasury Scott Bessent speaks, in the White House, in Washington, our February 3, 2025.
Elizabeth Frantz | Reuters
The Trump government is more focused on keeping the Treasury yield yield instead of what the Federal Reserve does, said Finance Minister Scott Bessent on Wednesday.
While Trump has begged the FED in the past to lower its benchmark percentage, Bessent said that the current strategy uses the levers of tax policy to keep rates low. The benchmark that uses the administration is the 10-year-old treasury, not the federal funds that the central bank checks, he added.
“The president wants lower rates,” Bessent said in an interview with Fox Business -Gastheer Larry Kudlow, who was director of the National Economic Council during the first term of Trump. “He and I are aimed at the 10-year-old treasury and what is the proceeds from it.”
From September 2024, the FED was involved in a tariff -saving cycle that took a full percentage of the fund percentage. The benchmark adjusts what banks charge each other for short -term loans, but has historically influenced a large number of other rates for things such as car loans, mortgages and credit cards.
However, Treasury yields actually jumped after the cuts of the FED, just like market-based indicators of inflation expectations. However, since Trump has noticed, the 10-year-old treasury has usually moved lower and he has fallen around 10 basic points, or 0.1 percentage point, in Wednesday trade.
10-year yield
Bessent indicated that Trump will not hang the Fed to cut, as he did during his first term.
“He wants lower rates. He does not call on the Fed to lower the rates,” said Bessent. Trump believes that “if we deregulate the economy, if we do this tax assessment, if we take energy, the rates take care of ourselves and the dollar will take care of itself.”
A priority of the administration is to make the tax cuts and job law permanent, while it will also focus on energy exploration and shortage reduction.
“We lowered the expenditure, we reduce the size of the government, we get more efficiency in the government and we go into a good interest cycle,” Bessent said.
The declaration of the Minister of Finance on the aiming of bonds “is consistent with our opinion that he essentially has one job – to try to prevent the 10Y yield from breaking 5 percent, after which we think Trumponomics falls apart, with shares that Rolling and housing and other rate sensitive sectors break lower, “wrote Krishna Guha, head of global policy and the central bank strategy at Evercore Isi.
The last 10-year-old traded at 4.45%, a sense of the peak of the mid-January of 4.8%.
A few days ago, Trump in fact said he agreed with the Fed decision on January 29 to keep the rate of the funds stable, of which Guha said that “the tension” between the two parties enlightens and could be positive For markets.
