US Treasury Secretary Scott Bessent said on Wednesday that the Trump administration aims to reduce loan costs in the economy by reducing yield on the Treasury ticket to 10 years.
“He and I focus on the treasure at 10 years old,” said Bessent at Fox Business when asked plans to reduce interest rates. “He does not call the Fed to reduce interest rates,” added Bessent.
The 10 -year yield, the rate so -called risk -free, influences most long -term loans of the economy, including mortgage and commercial loans. Thus, a declining return to 10 years encourages borrowing and investment, increasing risk -taking in the economy and financial markets.
Thus, the softening of the yield at 10 years is generally considered optimistic for risk assets, including Bitcoin (BTC). Trump plans to reduce the yield by controlling inflation, which will probably increase well for the BTC and reducing the budget deficit, which can be a headwind for risk assets.
“The energy component for them is one of the safest indicators of long -term inflation expectations,” said Besse, reiterating that the increase in energy supply will help reduce inflation.
Other things being also equal, lower inflation would allow the Federal Reserve (Fed) to continue the reduction rates, which are still very in restrictive territory. This could add risk assets to the bullish momentum. Since September, the FED has reduced the reference cost of 100 basic points to a range of 4.25% to 4.5%.
Meanwhile, the strategy of besing to inject downward pressure on the 10 -year yield also involves repairing the huge budget deficit thanks to reduced tax expenditure. The reduction in deficit would mean less the supply of bonds, higher bond prices and lower yields.
That said, the supposed budgetary expenses of the Biden administration of the administration of the administration of the administration of the administration of the administration, remunerated the high rates of the high Fed and the greased financial markets. Thus, any reduction in expenses could destabilize risk assets, including cryptocurrencies.
“Of course, obtaining the yield in 10 years on a downward path involves measures to improve the American budgetary position, as well as inflation. So far, we have had its partner, Musk, reducing government programs Federal like USAID, federal employees and such.
“Most American spending is healthy, social security and defense. Trump will inflict the pain that his goal seems to be involved? There is barely a politician who would do it,” added Sheridan.
Take advantage of the lower movement while it lasts
The 10 -year yield fell from 38 base points to 4.42% as market prices in the drop in energy prices and non -inflationary growth, according to Bessent.
ING analysts, however, do not see a sustained drop.
“We also claim that there is no huge place to decrease for the 10 -year yield. An effective floor is in place at just under 4%, as a determinable of the rate of funds. This soil can, of course, move lower, but need a better reason than an approach rate of 10 years.
ING added that it is difficult to see a large driver for a yield of less than 10 years, with the exception of a huge potential success of the government’s ministry, or DOGE, created to reduce unnecessary budgetary expenses and the federal Slash regulations.
