SINGAPORE (Reuters) – Bonds firmed, U.S. stock futures rose and the dollar fell in early morning trade on Monday as investors cheered the nomination of fund manager Scott Bessent as the next U.S. Treasury secretary, believing he would be a voice in Washington markets.
Benchmark 10-year Treasury futures rose 13 ticks, before the open and rose 0.4% to just shy of a record high while the dollar weakened across the board, lifting the stripped euro 0.5% to $1.0484 .
“The market’s perception that Bessent is a ‘safe hands’ candidate,” said Stephen Spratt, strategist at Societe Generale (OTC:), has been put to rest as the risk of an illegal option has been taken out of the markets.
Australia’s stock market hit a record high. Futures showed a strong opening in Japan and a weak start in Hong Kong. Trading for the week will likely be dampened by the Thursday Thanksgiving holiday.
The appointment of President-elect Donald Trump as Secretary of the Department of Finance has been closely watched in the bond markets as expectations for tax cuts as well as the imposition of taxes and a reduction in the level of immigration have led to fears of inflation and a large deficit.
Bessent told CNBC in early November, before he was selected as Treasury secretary, that he would recommend that “taxes be phased in”.
In a Bloomberg interview, he has advocated for the US to grow in debt and, in the Wall Street Journal about tax reform and deregulation, especially to stimulate bank lending and energy production.
He spent his career working for billionaire investor George Soros and noted short-seller Jim Chanos as well as running his own hedge fund.
The yen rose about 0.4% to 154.15 per dollar.
The dollar jumped 0.6% to $0.6541 and the , which hit a one-year low on Friday on growing bets on a stronger central bank, fell 0.5% to $0.5862. The Reserve Bank of New Zealand meets on Wednesday for a 50 bp rate cut and markets are suggesting about a 1/3 chance of a 75 bp cut in the largest possible size.
