Treasury Policy Review

Treasury Applying Pressure 📡

“It is the only ingredient missing for even stronger economic growth.”

Treasury Secretary Scott Bessent didn’t mince words ahead of his speech at the Economic Club of Minnesota. While the Federal Reserve operates independently, the administration is making its stance explicitly clear: Rates need to come down.

The message is blunt. The administration believes the supply-side legwork—deregulation, tax reform, trade deals—is done. Now, they are waiting on the demand-side lever (monetary policy) to be pulled. Bessent even invoked the “open-mind” era of Alan Greenspan, suggesting the Fed should prioritize growth potential over inflation paranoia.

A Divergence in 2026 📉

We are seeing a growing chasm between market pricing and official Fed projections.

  • The Fed’s Dot Plot: Signals one cut in 2026.
  • The Market: Pricing in two or more cuts.
  • The Administration: Explicitly demanding an aggressive easing cycle.

The Fed officially cut rates by 75 basis points in late 2025, bringing the target range to 3.50%-3.75%. However, data suggests the pace of cuts is set to slow. Bessent’s comments act as a counter-weight to the Fed’s hawkish caution. This is not just advice; it is political positioning ahead of a pivotal transition.

Watch the Chair 👑

The real story here isn’t the speech; it’s the audition. Jerome Powell’s term expires in May 2026. Bessent is overseeing the selection process, and the two front-runners represent binary outcomes for markets:

  • Kevin Hassett (The Dove): Aligns with the administration’s growth-at-all-costs mentality. An appointment here signals a regime shift toward higher inflation tolerance and lower rates.
  • Kevin Warsh (The Hawk/Realist): A more traditional central banker who prioritizes price stability.

Bessent’s rhetoric suggests he is leaning towards a candidate who will “do their part” to spur investment.

My Take: The pressure from the Treasury is unlikely to cease. If economic data shows even a hint of weakness, expect the administration to amplify calls for cuts. Positions that benefit from liquidity expansion (Tech, Crypto, Growth Equities) remain the primary vehicle to play this narrative, especially if Hassett takes the lead.

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Investments carry risk.