Treasury Secretary Scott Bessent stated that the Trump administration is prioritizing low treasury yields over Federal Reserve rate cuts. Unlike during his first term, Trump will not be pressuring the Fed to lower interest rates. Instead, the administration is focusing on fiscal policy tools to keep rates low.
Bessent emphasized the president’s goal of lower rates and highlighted the 10-year treasury yield as the benchmark. The current strategy aims to use fiscal policy to control yields, rather than relying on the Fed’s actions. This approach differs from Trump’s previous emphasis on reducing interest rates through monetary policy.
In recent months, the Treasury yields have moved lower, with the 10-year rate currently at 4.45%. Bessent noted that the administration is focused on specific economic goals, including the Tax Cuts and Jobs Act, energy exploration, and deficit reduction.
The Trump administration’s stance on low treasury yields is seen as a key aspect of its economic strategy. With the 10-year yield hovering around 5% threshold, experts believe that if rates exceed this point, “Trumponomics” may break down, leading to market volatility.
Source: https://www.cnbc.com/2025/02/06/bessent-says-trump-is-focused-on-the-10-year-yield-wont-push-fed-to-cut-rates.html