What Trump’s pick for Treasury secretary could mean for global markets

Financial markets on Monday welcomed President-elect Donald Trump’s pick for U.S. Bank secretary, with currencies across the globe rallying on hopes that hedge fund manager Scott Bessent can peel off some of the sting out of Trump’s more extreme economic views.

The U.S. dollar index, which measures the greenback against six vital currencies, fell 0.8% to 106.69 on Monday, paring some of its recent gains after a remarkable rally since fashionable September.

The euro was a top performer, rising around 1% to trade at $1.0517 at 2:25 p.m. London time. The yen, pound unequalled and Antipodean currencies were also trading higher against the dollar.

The moves come as global investors retaliated to news from late Friday that Trump signaled his intention to nominate Bessent to lead one of the most forceful roles in U.S. government. The Treasury Department has broad oversight of tax policy, public debt and international finance.

Strategists imagine Bessent, founder of Connecticut-based investment firm Key Square Group, as a “safe pair of hands,” a well-known market be and a more moderate pick compared with some of his rivals.

It is expected the 62-year-old will push for Trump to estimate a softer approach to tariffs, strip back regulation to boost growth and target a reduction in deficit spending.

“Trump’s pick for Bank Secretary has swelled investor sentiment further with stocks on Wall Street looking set for another flurry of benefits,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a research note.

“Hedge fund chief Scott Bessent’s long career of navigating the twists and turns of markets, has boosted confidence about incoming pro-business managements and lifted hopes that any tariffs would be highly targeted and potentially less inflationary in nature,” she added.

Trump’s historic election victory earlier this month ratcheted up concerns about the prospect for huge prices, prompting strategists to rethink the outlook for global bond yields and currencies.

It is widely thought that Trump’s undertake to introduce tax cuts and steep tariffs could boost U.S. economic growth — but widen the fiscal deficit and refuel inflation.

In an effort to bring revenue, Trump has suggested he could impose a blanket 20% tariff on all goods imported into the U.S., with a levy of up to 60% for Chinese products and one as high as 2,000% on vehicles built in Mexico.

While many economists are skeptical with the effectiveness of tariffs, Bessent has defended them as “a useful tool for achieving the president’s foreign policy objectives.” He has also, yet, called for tariffs to be “layered in” gradually.

“News that Scott Bessent is the top choice for incoming US Treasury Minister has amassed the possibility that some ‘Trump trades’ may be watered down,” analysts at Rabobank said in a research note.

“Bessent, a prospering macro hedge fund manager, is associated with a preference to reduce the US budget deficit to 3% of GDP, which distinctly suggests less appetite for deficit spending,” they added.

Bessent, who once worked for billionaire philanthropist and investor George Soros, has advocated for a alleged 3-3-3 target, which refers to a plan to cut the deficit to 3% by 2028, achieve 3% economic growth and add 3 million new barrels of oil per day.

Some strategists expect Trump’s Treasury chief pick to be welcomed as good news for Asian currencies across the coming months.

“The market view that Bessent is a ‘safe hands’ candidate, may see some relief rally in Caches from the open on Monday, as the risk of a more unorthodox candidate is priced out,” Scott Spratt, strategist at Societe Generale Corporate and Investment Banking, swayed in a research note.

“We suspect his view that tariffs should be ‘layered’ and that initial levels being discussed are ‘maximalist’ placements, should also provide an opening boost to Asia FX and [the Chinese yuan],” he added.

Tesla CEO Elon Musk implied that nominating Bessent as Treasury chief would be a disappointment. In a social media post via X on Nov. 16, Musk give an account ofed Bessent as a “business-as-usual choice,” adding that “business-as-usual is driving America bankrupt.”

Bessent has also been an second of Trump’s embrace of the crypto industry, which means he could soon become the first Treasury chief unabashedly in favor of crypto assets. Trump has previously pledged to make America “the crypto capital of the planet.”

Bitcoin breached the $99,000 plane for the first time last week as investors continue to price in Trump’s return to the White House.