Reply to Scott Bessent on the bond market

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Reply to "Scott Bessent on the bond market"

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[quote=Anonymous]The Financial Times published an article called "Bessent's Brag" that made the following point: 
https://www.ft.com/content/f29f8b5a-e79e-47e6-b3ab-b240cec7ee70

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	https://www.ft.com/content/f29f8b5a-e79e-47e6-b3ab-b240cec7ee70

Bessent’s brag is that, with Trump as president, yields have fallen a bit and been broadly stable, which is a good thing for the country. Should we credit the administration for this outcome?

The short argument for “no” is that the reason yields were high at the start of the year — setting little Franklin up for a nice return — is that the bond market was nervous about Trump’s fiscal policies and his attitude towards the Fed; and the reason yields have fallen is because Trump hasn’t been as incompetent as feared. This is a somewhat odd thing to take credit for (“We weren’t as crazy as we said we’d be!”) but it is also precisely Bessent’s point (“We proved the doubters wrong!”).

A better argument, for or against, would focus on why bond prices and yields moved. Trump haters will point out that one reason prices rise and yields fall is because growth expectations worsen.

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