Bonds & Stocks Increase as Traders Support Treasury Pick – Europe Market Wrap

Stocks and Treasuries climbed as traders expected the newly appointed US Treasury Secretary, Bessent to bring a Wall Street attitude to the post, softening the returning president’s enthusiasm for broad tax cuts and trade tariffs.

US market futures rose at least 0.5%, while the 10-year Treasury yield fell 5bps to 4.35%. The Dollar fell, as Bitcoin recovered from a weekend low.

The market movements represent a reversal of some of the characteristics that constitute the so-called Trump Trade, such as a rising Dollar and a booming Bitcoin. The cooling enthusiasm for these assets comes as traders reduce hopes that the president-elect will decrease taxes and increase tariffs, moves that might keep interest rates high and strengthen the Dollar.

Bessent’s nomination has alleviated concerns about the new president’s inflationary agenda, which had triggered a selloff in government bonds, sending the benchmark Treasury yield to a four-month high. The Key Square Group hedge fund manager has said he will support Trump’s tariff and tax cuts, but investors expect him to prioritise economic and market stability.

The Euro surged against the Dollar after ECB governing council member Villeroy stated that ECB policy will evolve regardless of what occurs at the Fed.

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