Trump's Treasury pick, Bessent, is a hit with U.S. stock and bond markets.

• On Monday morning, markets responded positively to President-elect Donald Trump's potential Treasury secretary nominee, resulting in a rise in equity futures and a decrease in Treasury yields.
• The appointment of hedge fund magnate Scott Bessent to the position previously held by Janet Yellen conveys that Trump seeks someone with a strong market background and a similar outlook for the role.
• Earlier this month, Bessent told CNBC that President Trump has some good ideas, but he doesn't want to cause inflation, which is the last thing he wants.

President-elect Donald Trump's presumptive nominee for Treasury secretary was seen as cheering the U.S. stock market, stating earlier this month that he foresees a period of robust growth and reduced inflation.

Late Friday's announcement that Trump would appoint Scott Bessent, a well-known Wall Street figure, to a key economic role in his administration caused stock market futures to rise and Treasury yields to fall early Monday.

Trump wants someone with strong market credentials and a similar philosophy for the role, as indicated by the move he sent.

According to Evercore ISI's chief strategist of international political affairs and public policy, Sarah Bianchi, the Trump administration will need to keep the bond market on its side if it is to advance its agenda successfully, given Bessent's in-depth understanding of financial markets and the economy.

Bianchi stated that markets "performed exceptionally well" compared to Bessent.

Since Trump's election earlier this month, which resulted in a red wave that flipped the Senate to Republicans and retained GOP control of the House, markets have been mostly positive but volatile. Specifically, bond yields have increased, with some interpreting the move as indicating an expectation of another leg up for inflation while others see it as traders pricing in stronger growth.

Bessent predicted that Trump's agenda would reduce inflation and boost growth in a CNBC interview the day after his victory, before the nomination announcement.

Bessent stated that the one thing the individual doesn't desire is a repetition of what has occurred under the Biden-Harris administration.

"President Trump has some excellent ideas, but I assure you, the last thing he desires is to cause inflation."

Bessent believes that the tariffs Trump may impose should be phased in gradually to prevent significant inflation.

President Trump's price adjustment, coupled with other disinflationary measures, will likely result in an inflation rate of 2% or below, as preferred by the Federal Reserve.

Moving in threes

Bessent proposes a three-step plan to address concerns about the national debt and deficits: increasing the economy's growth rate to 3%, reducing the budget deficit to 3% of GDP, which is half of its current level, and increasing oil production by three million barrels per day.

Wall Street commentary was almost universally positive.

Tom Lee, head of research at Fundstrat Global Advisors, stated that Bessent lends significant economic and market credibility to the incoming cabinet.

According to Lee, this strengthens the market's belief that the incoming White House favors a strong stock market.

Bessent, who previously supported Democratic causes but backed Trump in 2016, is expected to have an easy confirmation process.

Sen. Elizabeth Warren (D-Mass.) expressed concerns about the political left, stating that Bessent's "expertise is helping wealthy investors increase their profits, not reduce expenses for families struggling with corporate exploitation. I am uncertain if Mr. Bessent will switch his allegiance from Wall Street investors to the needs of American workers, but I am open to collaborating with anyone to promote the interests of working families."

According to Washington policy expert Greg Valliere, chief U.S. policy strategist at AGF Investments, Bessent should "sail to confirmation" and would join current Sen. Marco Rubio, whom Trump intends to nominate as secretary of State, "in the moderate wing of the Cabinet, with support in both parties."

Ed Mills, a Washington policy analyst at Raymond James, wrote that Bessent could play an important counterbalance to Commerce Secretary nominee Howard Lutnick as Trump pursues an aggressive trade agenda.

If President Trump's agenda can be achieved through economic growth rather than significant budget cuts, the market would view that as a positive, according to Mills.