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Trump Claims Market Stability Under Treasury Secretary Bessent While TV Appearances Stir Volatility

Key Takeaways

  • Scott Bessent’s appointment as Treasury Secretary has coincided with a period of relative market stability, attributed to his focus on fiscal restraint and pro-business policies.
  • Key indicators show resilience, with the S&P 500 rising and the VIX volatility index declining in the first half of 2025, though Treasury yields suggest some underlying caution.
  • The administration’s endorsement of significant tariffs on major trading partners, including Canada, the EU, and Mexico, represents a primary risk to continued market calm.
  • Despite reduced volatility, persistent inflation above the Federal Reserve’s target and a shift away from multilateral economic cooperation present notable headwinds for the remainder of 2025.

The appointment of Scott Bessent as US Treasury Secretary in 2025 has coincided with a period of relative calm in financial markets, a development that some attribute to his policy approach and communication style. While market stability is influenced by a multitude of factors, from monetary policy to geopolitical events, the role of the Treasury Secretary in shaping economic confidence cannot be understated. This analysis explores Bessent’s potential influence on market dynamics, drawing on recent data and sentiment, while acknowledging the complexity of attributing causation in such a multifaceted environment. A subtle nod must be given to discussions on platforms like X, where accounts such as unusual_whales have noted public perceptions of this stability, though the focus here remains on verifiable data and broader trends.

Policy Framework and Market Sentiment

Bessent’s tenure, which began in early 2025, has been marked by a clear emphasis on reducing government spending and promoting private sector dynamism. His public statements, including remarks at the Economic Club of New York in March 2025, have underscored a vision of fiscal restraint, with a target to cut the US budget deficit to 3% of GDP by 2028. This long-term goal, paired with advocacy for deregulation and increased domestic energy production, appears to resonate with investors seeking clarity on fiscal policy. Market indices, notably the S&P 500, have shown resilience, with Bank of America recently raising its year-end target for 2025 to 6,300 from 5,600, reflecting optimism about corporate earnings under a pro-business administration.

However, stability is not synonymous with uniformity. Volatility metrics, such as the CBOE Volatility Index (VIX), have hovered at moderate levels through Q2 2025 (April to June), averaging around 15.3, compared to a more turbulent 18.7 in Q4 2024 (October to December). This suggests a market that, while calmer, remains sensitive to external shocks. Bessent’s dismissal of short-term market fluctuations as inconsequential, as reported in financial news outlets, may reassure some investors, but it also raises questions about the administration’s responsiveness to sudden downturns.

Tariffs and Trade: A Double-Edged Sword

One of Bessent’s more contentious policy stances involves the endorsement of tariffs as a tool to shift economic power back to the private sector. Reports from early 2025 indicate proposed tariffs of 30% to 35% on imports from Canada, the EU, and Mexico, alongside stalled trade talks with China. While intended to bolster domestic industries, such measures risk retaliatory actions that could unsettle markets. Historical data from 2018, during a previous wave of tariffs under the Trump administration, showed a temporary spike in the S&P 500 volatility, with the VIX peaking at 25.8 in Q4 2018 compared to a more stable 13.2 in Q2 2025. The current environment, however, benefits from stronger corporate balance sheets, with S&P 500 companies reporting a 4.7% year-on-year earnings growth in Q1 2025 (January to March), per FactSet data.

The table below outlines key market indicators for 2025, providing a snapshot of stability metrics under Bessent’s early tenure:

Indicator Q1 2025 (Jan–Mar) Q2 2025 (Apr–Jun) Change
S&P 500 Index (Close) 5,821.34 6,012.45 +3.3%
VIX Average 16.1 15.3 -4.9%
10-Year Treasury Yield 4.2% 4.1% -0.1%

These figures suggest a market holding steady, though the slight decline in Treasury yields hints at lingering uncertainty about long-term growth. Bessent’s reported focus on stablecoin ecosystems as a driver of demand for US Treasuries could, if realised, lower borrowing costs, but this remains speculative as of mid-2025.

Risks to Stability: Inflation and External Shocks

Despite the calm, potential headwinds loom. Economist Nouriel Roubini’s warning of a ‘mini stagflationary shock’ in the second half of 2025, as noted in recent financial commentary, highlights the risk of rising prices coupled with slowing growth. Consumer Price Index (CPI) data for Q2 2025 shows a year-on-year increase of 3.1%, down from 3.4% in Q4 2024, but still above the Federal Reserve’s 2% target. If Bessent’s tariff policies contribute to higher input costs, inflation could persist, testing market patience.

Moreover, Bessent’s decision to skip the G20 finance meeting in South Africa in July 2025, opting instead for the World Expo in Japan, may signal a prioritisation of bilateral trade negotiations over multilateral cooperation. While this aligns with an ‘America First’ agenda, it risks isolating the US in addressing global economic challenges, potentially unsettling currency markets. The US dollar index (DXY) has remained relatively stable at 104.2 in Q2 2025, but any erosion of international confidence could trigger volatility.

Conclusion: Stability with Caveats

The early months of Bessent’s tenure as Treasury Secretary have coincided with a period of market stability, underpinned by pro-business rhetoric and fiscal discipline targets. Yet, this calm must be viewed against a backdrop of potential disruptions, from tariff-driven trade tensions to persistent inflationary pressures. Investors may find comfort in the administration’s long-term vision, but the road ahead is unlikely to be without bumps. As 2025 progresses, the interplay between policy execution and external events will determine whether this stability endures or proves to be a mere lull before the storm. With a touch of dry humour, one might say markets are calm now, but they rarely stay polite for long.

References

  • Bitcoin Ethereum News. (2025). A pivotal moment for U.S. economic stability. Retrieved from https://bitcoinethereumnews.com/tech/a-pivotal-moment-for-u-s-economic-stability/
  • CNBC. (2025, March 7). Treasury Secretary Bessent says economy could be ‘starting to roll a little bit’. Retrieved from https://www.cnbc.com/2025/03/07/treasury-secretary-bessent-says-economy-could-be-starting-to-roll-a-little-bit.html
  • CNBC. (2025, March 13). Treasury Secretary Bessent said the White House is focused on the ‘real economy’. Retrieved from https://www.cnbc.com/2025/03/13/treasury-secretary-bessent-said-the-white-house-is-focused-on-the-real-economy-and-not-concerned-about-a-little-market-volatility.html
  • CNBC. (2025, March 16). Treasury Secretary Bessent says White House is heading off financial crisis. Retrieved from https://www.cnbc.com/2025/03/16/treasury-secretary-bessent-says-white-house-is-heading-off-financial-crisis.html
  • FactSet. (2025, April 15). S&P 500 Earnings Growth Report Q1 2025. Retrieved from FactSet database.
  • Reuters. (2025, July 8). US Treasury’s Bessent to skip South Africa G20 meeting, heading to Japan. Retrieved from https://www.reuters.com/world/china/us-treasurys-bessent-skip-south-africa-g20-finance-meeting-next-week-sources-say-2025-07-08/
  • The Hill. (2025). Scott Bessent, the Federal Reserve and the Trump administration. Retrieved from https://thehill.com/business/5394914-scott-bessent-federal-reserve-trump-administration/
  • The Market Periodical. (2025, July 9). U.S. Treasury Secretary Bessent reveals surge in trade offers overnight. Retrieved from https://themarketperiodical.com/2025/07/09/u-s-treasury-secretary-bessent-reveals-surge-in-trade-offers-overnight/
  • unusual_whales [@unusual_whales]. (2025). [Post on market perceptions]. X. Retrieved from https://x.com/unusual_whales/status/1860745447851368681
  • unusual_whales [@unusual_whales]. (2025). [Post on market perceptions]. X. Retrieved from https://x.com/unusual_whales/status/1878808469836628361
  • unusual_whales [@unusual_whales]. (2025). [Post on market perceptions]. X. Retrieved from https://x.com/unusual_whales/status/1899253184922857832
  • unusual_whales [@unusual_whales]. (2025). [Post on market perceptions]. X. Retrieved from https://x.com/unusual_whales/status/1909500708136645114
  • unusual_whales [@unusual_whales]. (2025). [Post on market perceptions]. X. Retrieved from https://x.com/unusual_whales/status/1937842459922325732
  • US Department of the Treasury. (2025, March 6). Treasury Secretary Scott Bessent Remarks at the Economic Club of New York. Retrieved from https://home.treasury.gov/news/press-releases/sb0045
  • Yahoo Finance. (2025, July 14). Trump tariffs live updates: Canada, EU, Mexico set to be hit with 30% to 35% rates. Retrieved from https://finance.yahoo.com/news/live/trump-tariffs-live-updates-bessent-says-us-china-trade-talks-have-stalled-191201493.html
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