Stocks, Bonds Rise as Traders Embrace Bessent: Markets Wrap

(Bloomberg) -- Equities and Treasuries advanced, with traders welcoming Donald Trump’s pick of Scott Bessent for Treasury Secretary as a measured choice that would inject more stability into the US economy and financial markets.

Stock benchmarks rose across Asia in early Monday trade, with markets from Australia to Japan and Hong Kong recording gains. US futures also edged higher. Meanwhile, the yield on 10-year Treasuries dropped four basis points to 4.36%. The dollar declined while Bitcoin rebounded from a weekend drop.

Bessent, who runs macro hedge fund Key Square Group, has indicated he’ll back Trump’s tariff and tax cut plans but investors expect him to prioritize economic and market stability over scoring political points. The nomination has eased concerns over the incoming president’s protectionist policies, which had threatened to stoke inflation, worsen trade tensions and amplify market volatility.

Elements of the so-called Trump Trade that feature a surging dollar and rallying Bitcoin are cooling, as traders trim bets on elevated interest rates that may result from pricier imports and lower taxes.

“He brings this sense of almost gradualism to the administration as opposed to taking a big bang approach to making big policy changes,” Brian Jacobsen, chief economist at Annex Wealth Management, said on Bloomberg TV. Markets may be relieved that the pick signals “an ‘America First’ kind of administration but not an ‘America Exclusively’ kind of administration,” he said.

In currency markets, the greenback declined against its major peers, with the Australian dollar and Swedish krona leading gains. The dollar had climbed for eight straight weeks, as traders priced in Trump’s fiscal policies including sweeping trade tariffs and persistent economic growth. 

US stocks rose on Friday, with the S&P 500 gaining 0.4% as beneficiaries of the incoming administration’s looser regulation and business-friendly stance climbed.

Japan, US Data

Oil steadied after the biggest weekly advance in almost two months as geopolitical risks in Ukraine and the Middle East kept investors on edge. Gold dropped after jumping the most in 20 months last week.

This week, traders in Asia will be closely monitoring Japan’s inflation data after Bank of Japan Governor Kazuo Ueda last week indicated the December policy meeting is live. The Reserve Bank of New Zealand is expected to cut its key rate on Wednesday. 

Elsewhere, a swath of inflation and growth readings in Europe are due. Traders will closely parse the Federal Reserve’s November meeting minutes, consumer confidence and personal consumption expenditure data to help assess the outlook for rate cuts next year.

“Equity bulls will want to see a healthy bounce in the consumer data, married with a below consensus read on PCE inflation,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With US swaps now implying a 36% chance of a 25 basis point cut from the Fed on 18 Dec, weaker US data would see pricing for a 25 basis point cut rise back above 50%, which should support equity risk and be a headwind for the US dollar.”

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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