Asian stocks rose in early trade Monday, with benchmarks in Australia, Japan and South Korea recording gains. US futures also edged up. Meanwhile, the yield on 10-year Treasuries dropped five basis points to 4.35%. Bitcoin pared losses.
The moves indicate elements of the so-called Trump Trade are cooling after the incoming president named Bessent, who runs macro hedge fund Key Square Group, to oversee the US government debt market, tax collection and economic sanctions. While Bessent indicated he’ll back Trump’s tariff and tax cut plans, investors expect he will prioritize economic and market stability over scoring political points.
Bessent’s nomination may ease some concerns over Trump’s impact on other countries’ economies and currencies around the world.
“He brings this sense of almost gradualism to the administration as opposed to taking a big bang approach to making big policy changes,” Brian Jacobsen, chief economist at Annex Wealth Management, said on Bloomberg TV. Markets may be relieved that the pick signals “an ‘America First’ kind of administration but not an ‘America Exclusively’ kind of administration,” he said.
Meanwhile, the greenback declined against major peers with the Swedish krona and Australian dollar leading gains. The dollar had climbed for eight straight weeks, as traders priced Trump’s fiscal policies including sweeping trade tariffs and persistent economic growth.
US stocks rose on Friday, with the S&P 500 gaining 0.4% as beneficiaries of the incoming administration’s looser regulation and business-friendly stance climbed.
Oil steadied after the biggest weekly advance in almost two months as geopolitical risks in Ukraine and the Middle East kept investors on edge. Gold was little changed after trading at more than $2,700 an ounce.
This week, traders in Asia will be closely monitoring Japan’s inflation data after Bank of Japan Governor Kazuo Ueda last week indicated the December policy meeting is live. The Reserve Bank of New Zealand is expected to cut its key rate on Wednesday.
Elsewhere, a swath of inflation and growth readings in Europe are due. The Federal Reserve’s November meeting minutes, consumer confidence and personal consumption expenditure data, the central bank’s preferred gauge of inflation, will be closely parsed to help assess the outlook for rate cuts next year.
“Equity bulls will want to see a healthy bounce in the consumer data, married with a below consensus read on PCE inflation,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With US swaps now implying a 36% chance of a 25 basis point cut from the Fed on 18 Dec, weaker US data would see pricing for a 25 basis point cut rise back above 50%, which should support equity risk and be a headwind for the US dollar.”
