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GRAEME SLOAN/PRESS POOL |
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Good morning. The bond market was going bonkers, and relatively untested Treasury Secretary Scott Bessent had to do something. So Wednesday morning, he announced the U.S. government would buy up more bonds. This bond-market Band-Aid calmed things down a bit, but it’s not a long-term solution. |
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Bessent is a curious character in Trump 2.0. The tough talk bravado doesn’t come as naturally to him as it does to some other members of the cabinet, though that doesn’t stop him from trying at cabinet meetings or in television appearances. |
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The truth of the 2026 economy isn’t an easy one to put on a bumper sticker. Yes, the stock market is near record highs and the unemployment rate is relatively low. But hiring has slowed. The bond market is worrisome, and budget deficits are very stretched. |
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Meanwhile, Bessent has pledged to help two Trump-friendly governments in Argentina and Japan, putting a bit more political spin on fiscal policy than we normally see. |
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I’ve covered eight Treasury secretaries. There’s always an awkward political element to these jobs that none of them ever quite master. John Snow traveled heavily to Ohio in 2004 to promote the economic agenda (it just so happened George W. Bush wanted badly to win Ohio, and Snow was from there). Hank Paulson got down on a knee at one point during the financial crisis to coax Democrats to help with a bailout. I went with Jack Lew to China in 2013 to meet the country’s new leader, Xi Jinping. I went with Steven Mnuchin to Baden-Baden, Germany. |
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Last week, when the bond market was fritzing, Bessent was in Iowa with two Republicans running in tight election races (it felt like half of Trump’s cabinet has visited Iowa in the past week). |
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These Treasury jobs, at the end of the day, are to keep financial markets moving smoothly and prevent fiascos. They can get dragged into politics, but that’s not their job. They are third in line to the presidency for a reason. Getting the balance right is easier said than done. |
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If Bessent blows it, and the bond market can’t be sweet-talked, the political races in Iowa will be the least of his problems. |