Bonds rise, dollar falls due to Bessent’s choice

Tom Westbrook and Kevin Buckland

SINGAPORE (Reuters) – Bond markets cheered the election of fund manager Scott Bessent as U.S. Treasury secretary on Monday on hopes he can keep U.S. debt under control, while falling yields pulled the dollar lower and sentiment lifted U.S. stock futures close to records. maximums.

S&P 500 futures were last up 0.5%, while Dow and Nasdaq futures were up 0.6%. Even weaker European futures rose 0.7%, while the lone euro, which hit a two-year low on Friday, jumped 0.5%.

Italian lender UniCredit announced a $10.6 billion purchase of rival bank Banco BPM, putting the stock in the spotlight at the Milan opening.

The 10-year Treasury yield fell more than 5 basis points to 4.355%, and the dollar also fell against the yen, sterling and Antipodean currencies. (USA/)(FRX/)

“The market view is that Bessent is a ‘safe hands’ candidate,” said Stephen Spratt, strategist at Societe Generale, which was a relief as the risk of a more unconventional pick was taken out of the markets and as Bessent mentioned curbing US borrowing. .

In Asian stock markets, Japan’s Nikkei jumped 1.7%, while gains in Sydney and Seoul offset selling in Hong Kong and China, lifting MSCI’s broadest index of Asian shares outside Japan up about 0.7%.

President-elect Trump’s nomination of a Treasury secretary is being closely watched in bond markets as expectations of tax cuts, as well as tariffs and an immigration crackdown, fuel fears of inflation and large deficits.

Bessent told the Wall Street Journal in an interview published Sunday that cutting taxes and spending is a priority.

Bessent told CNBC earlier in November, before he was chosen as finance minister, that he would recommend “a gradual increase in tariffs,” although his appointment provided only the most basic and short-term boost to the Chinese yuan.

The currency last traded at 7.2445 per dollar, while the stock market was saturated with sales of e-commerce shares in Hong Kong. The Hang Seng fell 0.4% and the Shanghai Composite fell 0.6%.

EURO PRESSURE

The coming week is likely to be eased by the Thanksgiving holiday on Thursday in the United States, where many traders are likely to spend the long weekend.

October PCE and unemployment data will be released on Wednesday along with the latest GDP estimate, followed by Federal Reserve minutes on Tuesday.

Market prices for next month’s Fed rate cut, which has eased in recent weeks, were stable in Asia, with roughly equal chances of a pause or a 25 basis point cut. Expectations for a deep rate cut in New Zealand are gaining momentum, with a 50 basis point cut on Wednesday at full price and the possibility of a 75 basis point cut. are approximately 1/3.

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