Wall Street welcomes Donald Trump’s pick of Scott Bessent for Treasury secretary

Scott Bessent sat directly to Donald Trump’s left as the then presidential candidate laid out his economic agenda to a roomful of Wall Street bigwigs at the Economic Club of New York in September. 

Following his nomination to the top job at the US Treasury department, Bessent will now move into the spotlight as the most important economic official in the Trump administration.

Trump’s decision to tap the hedge fund manager comes after a tumultuous fight for the Treasury post, which saw the president-elect expand his search at the eleventh-hour after bitter infighting between Bessent’s camp and another top contender, billionaire investor Howard Lutnick.

Lutnick, who was helping to staff up the cabinet, was in the interim tapped to be commerce secretary with oversight over the US Trade Representative’s office — a crucial role, but not the true prize of Treasury.

Billionaire Marc Rowan of Apollo Global Management and former Federal Reserve governor Kevin Warsh were also in contention in the final days before the announcement, as was Tennessee Senator Bill Hagerty.

In picking Bessent, Trump has broken from the mould that shaped his other senior cabinet picks.

Those nominations bucked the orthodoxy — and sparked controversy. On Thursday, one of them, former congressman Matt Gaetz, withdrew his nomination for attorney-general after lurid headlines about his private life.

Rather, Bessent, who runs Key Square Capital Management, is seen across Wall Street and Washington as a pragmatic pick, who is well positioned to manage the vast responsibilities of such a high-profile job.

“In choosing somebody who essentially could have been the Treasury secretary in an ordinary Republican administration, there is a sigh of relief that at least there’ll be one economic adult in the room,” said David Wessel, a senior fellow at the Brookings Institution.

Jason Furman, a Harvard professor and former White House economic adviser, described Bessent as a “credible Treasury secretary who has a real understanding of the global economy”.

Stephen Moore, an economist close to Trump who speaks with Bessent weekly, characterised him as a “financial markets genius” and a “renaissance man” given his vast knowledge of economic and financial affairs.

Jens Nordvig, who signed Bessent as his first client when he started his company Exante Data, described the hedge fund manager as a “measured communicator as opposed to a loose cannon”.

“I think that is an advantage as a Treasury secretary,” he added.

If confirmed by the Senate, Bessent will have no shortage of challenges to tackle, including shepherding sharp tax cuts into law, liaising with unnerved trading partners over tariff negotiations, and dealing with the economic fallout if Trump follows through with his pledge to deport immigrants en masse.

“When you look at what will be on Bessent’s plate — selling Congress on huge debt and deficit expansion, dealing with a Fed which might be under Trump’s gun, addressing a super strong dollar while a cacophonous White House and trade teams call for devaluation, and maintaining a semblance of an economic relationship with China amid uber-hawks everywhere — it’s not an appetising meal,” said Mark Sobel, a former Treasury department official.

Looming large over the job is the $27tn Treasury market — the world’s largest and most important bond market — which Bessent will be tasked with overseeing.

Trump’s plans are expected to add as much as $15tn to the country’s debt over the next decade, according to recent estimates, while also stoking inflation.

That could mean the Fed has less scope to lower interest rates as it fends off fresh price pressures, potentially setting up a clash with chair Jay Powell, who drew Trump’s ire in his first term for ignoring demands to lower interest rates more quickly.

“As the debt grows larger and as there’s increased pressure on interest rates to rise, the Fed shouldn’t fight that,” said Steven Kamin, who used to run the international finance division at the central bank. 

Interest payments already cost the federal government nearly $900bn a year, the second-largest expenditure behind social security. That was a “domestic political issue that will need to be managed”, said Mahmood Pradhan, head of global macro at Amundi Investment Institute.

The overarching fear, however, is that Trump will more directly encroach on the Fed’s independence in his second stint in the White House, either by seeking to unseat Powell before his term expires in May 2026 or nominating a new chair more amenable to influence when the seat opens up.

Steven Mnuchin, Trump’s first and only Treasury secretary who came from Goldman Sachs, was instrumental in reassuring financial markets that Powell’s job was safe despite threats from the then-president — something Wall Street would demand of Bessent.

“I think we should expect president Trump to try and use leverage to get the Fed to do what he wants,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “An issue facing the next Treasury secretary is how to handle that and whether to go along with it or whether to try and push back against those impulses.”

Bessent has already walked back an unorthodox proposal for a “shadow” Fed chair, who would have been widely recognised as Powell’s successor long before he was due to step down and could have shared potentially contrasting views about the economic outlook. The prospects of muddied communications would be highly disruptive to financial markets, Wall Street veterans warn.

Jason Trennert, who has known the Bessent for 20 years as head of markets and economic analysis firm Strategas Research Partners, said he did not expect him to be a “pushover” or a “patsy”. “He’ll be a strong voice for what he thinks is right”.

The day-to-day responsibilities managing the more than 100,000 employees in the department will itself be a vast undertaking, especially for someone who has never held a government position before. 

Aaron Klein, who has previously served as deputy assistant secretary for economic policy at the Treasury, said it would be crucial for Bessent to bring in experienced deputies because “the art to running a government agency is very different from making trades on Wall Street”.

“If you’ve never been in the government and you come in in one of the most senior positions, you better have someone who knows how to manage a government agency pretty close to you or else the swamp can swallow you up,” he added.