Desk
Share
Scott Bessent who serves as Treasury Secretary stated the Trump administration opts to reduce costs through 10-year Treasury yields instead of the benchmark short-term rate controlled by the Federal Reserve.
Bessent declared during his Fox Business interview on Wednesday that Trump administration teams together with him focus specifically on the 10-year Treasury. Trump does not ask for the Federal Reserve to decrease its interest rates.
During his interview with Fox Business Bessent maintained his opinion that increasing energy production reduces inflationary pressures. The energy costs Americans in the working class use to determine their expectations about long-term inflation rates according to him.
Customers will experience dual benefits when fuel prices decrease because they will decrease expenses and boost their outlook on the upcoming economic development according to Bessent.
He explicitly stated that his comments regarding the Federal Reserve would only focus on previous actions rather than share his thoughts for their future direction. He analyzed the Federal Reserve’s “jumbo rate cut” from September by referencing the increase in 10-year Treasury yields.
The Federal Reserve's benchmark rate stands as the primary market guide for money transactions yet 10-year Treasury securities function as the benchmark reference for long-term mortgage and all essential loan rates. The Wednesday bond benchmark for 2025 reached its new yearly minimum due to servie-sector economic indicators below expectations and Treasury prices which held steady during Asian market hours after the Bessent speech.
According to Bessent the bond market demonstrates recognition that lower energy prices under Trump administration will lead to non-inflationary economic growth. Government spending reductions together with smaller public institutions yield superior government performance. The economy will start a positive interest-rate phase following the current period.
The government possesses two methods to affect bond yields by deciding which maturity dates to offer on debt sales and reducing borrowing through deficit reduction.
When Bessent earned his position Treasury officials preserved their previous statements about unchanged long-term debt sales until 2025 even though he had previously criticized earlier debt issuance plans. The market expects dealers to experience inevitable higher sales of long-term bonds in the future since this would boost bond yields.
Central banks can directly control bond yields through so-called curve control interventions as Japan practiced in its recent bond purchasing program until 2019. The United States implemented this bond purchase policy in 1940s and the Federal Reserve executed Operation Twist by acquiring longer-term bonds twelve years ago.
According to Bessent the Fed acts independently from the Treasury and showed no preference for this direct intervention policy.
Stephens Miller at Grant Samuel Funds Management in Sydney believes that lowering the 10-year yields would best occur through decreased budget deficits. Household consumption deficit in the United States matches approximately 7% of its gross domestic product at present.
According to him concrete measures include budget deficit closure followed by deficit reduction together with examining the effects of the entire tariff policy. The situation will improve when energy supply increases. The combination of tariffs with budget deficit and immigration policies does not fully persuade me that bond yields will decrease.
Fed Rates
The US president posted on social media to criticize the Federal Reserve for price inflation failures which stemmed from their policy actions. During his first administration Trump refrained from ordering direct Fed policies he previously requested although he continued to exercise pressure on the institution.
The president holds that when government endorses lower energy prices while executing extended tax cuts with economic deregulation then interest rates and currency value will automatically stabilize according to Bessent.
Bessent delivered the economic policy points 3-3-3 to Kudlow during their interview as he restated Trump's approach to reduce the deficit to 3% of GDP from its current 6% level while raising daily oil output by 3 million barrels per day and sustaining economic expansion at 3% annually.
Bessent affirmed his support for the 3-3-3 policy after taking his current position because the program now seems more convincing to him than ever. Private-sector growth represents the focus of the new team because they believe capital investments and domestic manufacturing should draw jobs back from foreign operations.
According to Padhraic Garvey at ING Groep NV who leads a team of strategists “The latest Trump administration angle is for rates to be pushed lower through downward pressure on the 10-year yield, through lower inflation and a lower fiscal deficit.” “Achieve that and we’d agree. But achieve it first.”
Government Efficiency
The officials from Elon Musk's DOGE group are not involved in the payment decisions of the Treasury department according to Bessent who confirmed the information released earlier by the Treasury.
Bessent made it clear that payment systems under the Treasury Department remain untouched by any alterations. “There’s a study being done. The system requires additional accountability tools to guarantee that payments reach their intended destination accurately with full traceability he emphasized.
According to Bessent the Department of Government Efficiency's entire effort to enhance efficiency will succeed.
During a recent interview Bessent reaffirmed his backing for extended permanent application of Trump's 2017 tax code despite Republican speculation about shortened terms for the reforms.
“President Trump has a mandate. The Trump administration decided to make maintaining the 2017 Tax Cuts and Jobs Act as a central strategic agenda according to Bessent. Permanent provisions in the 2017 Tax Cuts and Jobs Act establish the United States as the top growth economy on the planet.
Read More: Integrated Industries Multibagger Stock Turns One Lakh Rupees into Six Crores in Five Years
