Treasury Secretary Scott Bessent is downplaying the Wall Street sell off following the White House’s trade war with Canada, China and Mexico. On fox & Friends he said the President’s focus is on making life better for everyday Americans, despite market worries over 20-25% tariffs on key trading partners.
Rebalancing the Economy
Bessent acknowledged Wall Street’s success but said the administration is focused on small businesses and consumers. He said the goal is to rebalance the economy so Americans are better off in the long run.
He said this after the tariffs kicked in and the Nasdaq was down nearly 2% in the morning. It’s now 10% off the December 16 high
Mortgage Rates Plummet
Treasury Secretary Scott Bessent pointed out that mortgage rates have fallen sharply since Election Day and the inauguration. He credits some of that to anticipated bank deregulation which he believes will help the economy and mortgage rates.
Thursday the 30 year mortgage rate fell to 6.76%, the lowest in two months, down from 6.85% last week. Rates had peaked at a 10 year high of 7.79% on October 26, 2023 during the Biden administration.
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Bessent Brushes Off Inflation Worries Over Tariffs
Some economists worry that tariffs on Canada, China and Mexico will fuel inflation and keep rates high through 2026. But Bessent brushed off those concerns citing Honda’s decision to move production from Mexico to Indiana to avoid the tariffs. He said manufacturers will absorb the costs and there will be no price increases.
He also said lower rates will help homeowners and relieve consumers by reducing credit card and auto loan costs. “Lowering rates is one of our biggest wins so far” he said.
While inflation has come down Bessent acknowledged it’s not at the Fed’s target yet. And he recognized affordability is still a big problem.
Since Trump took office investor expectations for rate cuts have shifted. The Fed is now expected to cut rates three times by the end of 2025 bringing the federal funds rate down from 4.25%-4.5% to 3.5%-3.75% – a big change from the single rate cut expected when Trump took office.
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