U.S President Elect Donald Trump’s decisions continue to affect the US economy and politics, if not the World. Trump has been on a path to form a cabinet with the most interesting czars in America.
The 47th POTUS has announced his nomination for the Treasury Secretary office as Scott Bessent, a hedge fund manager.
The dollar tanked after Trump nominated Scott Bessent in the Treasury, post previously held by the 78-year-old Janet Louise Yellen, who served under the outgoing Biden's administration.
" Scott is widely respected as one of the World’s foremost International Investors and Geopolitical and economic strategists. He will support my Policies that will drive US Competitiveness and stop unfair Trade imbalances.” Trump Said in his announcement.
Scott Bessent will lead the US Treasury Department, an influential government role that oversees tax policy, public debt, international finance, and sanctions.
The dollar is currently the global reserve. Its index tracks several currencies, such as the yen and euro. The US dollar weakened on Monday, a tale of the sentiment that lies with investors.
There have been expectations that Trump’s tariffs and tax cuts will drive inflation and put upward pressure on US interest rates. This caused the index to rally by more than 7% from the beginning of last month to Friday.
The dollar has shown an impact, as there has been a downward trend of as much as 0.7% in Asia. The US’s major Asian trading partners were buoyed by news of the appointment, which came after market close on Friday.
The US 10-year Treasury yield fell by 0.07% and now stands at 4.35%. Bond yields will also be affected as they move inversely to prices. Japan’s export-heavy Nikkei 225 index and South Korea’s Kospi both closed at 1.3%.
Trump’s victory had investors worried because of his take on tariffs. As a candidate, he pledged to impose 60% tariffs on goods from China, as well as 20% tariffs on goods from other countries.
Scott’s nomination, however, eased investors’ fears about Trump’s trade tariff plans. He described sweeping tariffs as maximalist positions.” This was taken by investors as a sign that Trump’s policies may be moderated.
Scott also said that he would recommend that tariffs be “layered in gradually” to mitigate the risk of shocks in the market. In addition, Paul Donavan, Chief economist at UBS Global Wealth Management said, “Having at least one significant advocate around the cabinet table arguing against persistent trade taxes is a positive for markets.”
Aside from Scott’s nomination, the US debt and global geopolitical shifts are also playing major roles in the development of this downward trend. It is expected that with time, Scott’s decisions will benefit the dollar.
Bessent, the founder of Key Square Group, is expected to support the new president’s economic agenda, which includes tariffs and pro-business policies. Investors believe Bessent, an experienced Wall Street executive and fiscal conservative, will prioritize economic and market stability in the United States.
Scott made it clear that he wants to extend the tax cuts made in Trump’s first term in office.
He has defended the use of import tariffs, calling them a “useful negotiating tool.”
During the campaign period, Scott told voters that Trump would usher in a “new golden age with de-regulation, low-cost energy, and low taxes.”
Bessent, who has been a donor, economic adviser and booster on TV for Trump, was nominated as U.S. Treasury secretary by Trump on Friday.
Bessent has spent his career in finance, working for macro investment billionaire George Soros and noted short seller Jim Chanos, and has advocated for tax reform and deregulation, particularly to spur bank lending and energy production, as noted in a recent opinion piece he wrote for The Wall Street Journal.
As U.S. Treasury secretary, Bessent will essentially be the highest-ranking U.S. economic official, responsible for maintaining the world's largest economy, from collecting taxes and paying the nation's bills to managing the $28.6-trillion Treasury debt market and overseeing financial regulation.
The Treasury boss also runs U.S. financial sanctions policy, has influence over the U.S.-led International Monetary Fund, World Bank and other international financial institutions, and manages national security screenings of foreign investments in the United States.