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Stocks, Bonds Rise as Traders Cheer Treasury Pick: Markets Wrap

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(Bloomberg) — A strong Asian day for stocks and Treasuries looks set to extend into Europe, where traders are accepting Donald Trump’s selection of Scott Bescent for Treasury Secretary as a calculated choice that would inject more stability into the U.S. economy and financial markets.

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Euro Stoxx 50 futures rose 0.6%, mirroring gains in their US counterparts. The upbeat tone continued from Asia, where market benchmarks from Japan to India advanced. Meanwhile, the yield on the 10-year Treasury note fell seven basis points to 4.33%. The dollar fell while Bitcoin rebounded from the weekend decline.

Market movements indicate a reversal of some of the elements that define the so-called “Trump Trade,” including a rising dollar and a rising Bitcoin. The slowdown in enthusiasm for these assets comes as traders reduce their expectations that the president-elect will cut taxes and boost tariffs, policies that could keep interest rates high and support the US currency.

Besant, who runs macro hedge fund Key Square Group, indicated he would support Trump’s plans to cut tariffs and taxes, but investors expect him to prioritize economic and market stability over political point-scoring. The nomination eased concerns about the next president’s protectionist policies, which threatened to stoke inflation, exacerbate trade tensions and increase market volatility.

“We have Trump’s deflationary agenda, and obviously there may be someone in charge of the economy at the Treasury who may be more gradualist,” Vincent Govins, global market strategist at JPMorgan Asset Management, told Bloomberg TV. “American exceptionalism will persist to some extent on the economic front, but also on the market front.”

The Bloomberg Dollar Index fell the most in more than two weeks, with the Danish krone leading the gains. Traders betting on Trump’s fiscal policies — including sweeping trade tariffs and continued economic growth — had pushed the dollar higher for eight straight weeks through Friday.

The euro also rose against the dollar, after ECB Governing Council member François Villeroy de Galhau said ECB policy will evolve regardless of what happens at the Fed.

Stock indices rose in India after Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led coalition won a landslide victory in Maharashtra. However, Chinese stocks bucked the trend in the region, reflecting continued investor disappointment over the lack of stronger fiscal measures to revive the world’s second-largest economy. The country’s central bank kept the interest rate on loans unchanged.

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