The new Treasury Secretary has now been on the job for a week, and today he gave some signals to markets.

Signal #1): This morning, the Treasury released plans to rollover Treasury debt that matures in the quarter.

Remember, Bessent himself said that Janet Yellen left the bond market in a vulnerable position.  She funded the deficit last year, largely with short-term debt.  That helped to suppress longer-term interest rates, which proved to maintain confidence in markets at the time.

But it leaves Bessent with a third of the outstanding government debt to rollover this year.

For now, Bessent is going to stick with the Yellen’s strategy — not to rock the bond market boat.

It signals near-term stability, and the perception that Bessent is confident he’ll see lower rates later in the year, to issue longer term maturities.

The bond market liked it.  The 10-year yield fell 20 basis points on the day.

Signal #2): In an interview later in the day, Bessent made his appeal to Congress to make the 2017 Trump tax cuts permanent.  And adding a little pressure, he warned not doing so would result in the biggest tax hike in history.

Remember, in his Senate confirmation hearing three weeks ago, he said that if Congress were to communicate to markets, the intent to make the tax cuts permanent, that it would unleash animal spirits and “a new golden age” for the economy.

Signal #3): In the same interview, he conveyed confidence that inflation would come down, rates would come down, and wars would end, with the presence of lower energy prices (by “unleashing American oil”).

Signal #4):  When prodded for an official statement on the dollar, as Treasury Secretary, Bessent said, “there is no alternative to the dollar.”

The Trump agenda continues to move at a rapid pace, across a variety of fronts.

He’s effectively fortified the Western Hemisphere in a matter of days, restoring American influence, and buttressing economic and national security. 

Today, the Middle East:  He called for maximizing economic pressure on Iran, to “drive Iran’s oil exports to zero.”  He called for more Middle Eastern countries to sign the Abraham Accord, he hosted Netanyahu, and he floated a plan to take over Gaza and create a safe location to relocate Palestinians. 

Russia/Ukraine:  Trump demanded access to Ukrainian rare earths yesterday in exchange for America’s financial support.  A day later, Zelensky said he would be willing to sit down for peace talks with Putin.

As for the EU, tariff threats have already been lobbed, and it’s probably more about restoring U.S. influence than it is balancing trade.

As you can see in this PEW Survey, China has gained significant influence over Europe, and largely stemming from its role in bailouts, following the sovereign debt crisis in Europe a little more than a decade ago.  

So, the Trump agenda is moving quickly, and by necessity. 

As we discussed yesterday, dealing with China is priority number one.  But these other pieces need to be in place, because the Trump 2.0 trade war with China will likely require global participation (maybe putting China in the trade penalty box). 

It’s a multi-front fight.  It’s fighting to rebalance global trade, and weaken the global reliance on China (weaken China’s economic and political leverage). 

And, related and very importantly, it’s fighting to win the AI arms race with China, which is a winner takes all. 

The first to reach artificial general intelligence (AGI/human intelligence with autonomy), will likely set international standards, rules, and ethical guidelines around AI use and governance. Much like with the internet and social media, early technological dominance gives the leading nation the ability to influence frameworks on how the technology is used, regulated, and adopted globally. 

It (the winner) will probably be the difference between AI that serves humanity, or AI that controls humanity (serving the interest of the Chinese Communist Party).