Hedge fund manager Scott Bessent, reported to be in line for a top job in the Trump administration such as Treasury secretary or Federal Reserve chair, wrote in a Wall Street Journal op-ed on Monday that the reactions in financial markets to the Nov. 5 elections "prove” investors’ "unambiguous embrace of the Trump 2.0 economic vision.”
Well, they certainly prove equity investors like the idea of lower tax rates and less regulation. Beyond that, it’s unclear what they prove and the clock is ticking for Donald Trump and his surrogates to provide answers to some critical questions around economic policy.
Just look at the government bond market, which is the benchmark for the global financial system, and the dollar, by far the world’s primary reserve currency. These markets signal that the warnings of faster inflation from economists who have analyzed the policies of a proposed Trump administration are all too real. And that means interest rates will be higher for longer and tighter financial conditions will restrain the economy.
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