Bescent says Trump is focusing on 10-year yields, not pushing to cut feeding

The Trump administration is focused on keeping Treasury yields low rather than what the Federal Reserve does, Scott Bescent said.

In the past, President Donald Trump has pleaded the Fed to cut benchmark rates, but Bessent said Wednesday that the current strategy uses a fiscal policy lever to keep rates low. The benchmark used by the administration will be the 10-year Treasury, not the federal fund rate controlled by the central bank, he added.

“The president wants a lower fee,” Bescent said in an interview with Fox business host Larry Kudlow, who served as director of the National Economic Council during Trump’s first term. “He and I are focusing on the 10-year Treasury Department and its yields.”

Since September 2024, the Fed has engaged in a rate cut cycle where he earned full points from the funding rate. Benchmarks set out what banks charge each other for short-term lending, but historically it has impacted many other fees, such as car loans, mortgages, and credit cards.

However, the Treasury has actually jumped following the Fed’s cuts, as well as market-based indicators of inflation expectations. But since Trump took office, in Wednesday’s deal, the Treasury has moved almost low in 10 years, down about 10 basis points (0.1 percent points).

Bescent has shown he won’t be Hector to cut the Fed, as Trump did during his first term.

“He wants a lower fee. He doesn’t ask the Fed for a lower fee,” Bessent said. Trump believes, “If we ease the economy, if we achieve this tax bill, if we keep the energy down, the tax rate will take care of ourselves and the dollar will handle itself.” Masu.

One of the administration’s priorities is to acquire permanent tax cuts and employment laws, but also focus on energy exploration and deficit reductions.

“We’re cutting spending, reducing government size, increasing government efficiency, and it’s a good interest rate cycle,” Bescent said.

A statement from the Treasury Secretary on bond yields stated, “It is consistent with our view that he essentially has one job. To prevent a 10Y yield from breaking 5%, Trumpnomics collapses. And as stocks roll, housing and other rates collapse, Krishna Guha, head of global policy and central bank strategy at Evercore ISI, wrote:

For the decade, it traded at a peak of 4.8% in mid-January, from 4.45%.

Shortly after taking office, Trump said he would demand lower interest rates. However, a few days ago, the president said the Fed agreed to a decision on January 29th to stabilize the funding rate. Guha said it would “relieve tension” between the two sides, and that it was positive for the market.