### Treasury Yields Decline as Trump Taps Hedge Fund Executive for Treasury Secretary

U.S. Treasury yields took a step back on Monday influenced by President-elect Donald Trump’s nomination of hedge fund executive Scott Bessent for Treasury secretary, and in anticipation of critical inflation data coming later in the week. The 10-year Treasury yield was down more than 9 basis points, touching 4.316%, while the 2-year Treasury yield dropped nearly 6 basis points to 4.311%. It’s worth noting that one basis point equals 0.01%, and bond yields and prices typically move inversely to each other.

Scott Bessent, founder of Key Square Group, has been selected by Trump to head the Treasury Department, calming investor concerns over the U.S. economic outlook. Bessent is expected to support Trump’s economic agenda, which includes gradual tariffs and pro-business policies. Despite his backing of such initiatives, Bessent's background as a Wall Street veteran and fiscal conservative suggests he will aim to maintain economic and market stability.

"The nomination of Scott Bessent to be U.S. Treasury Secretary has been a catalyst for lower bond yields, higher equity indices, and a weaker dollar this morning," wrote Kit Juckes, chief FX strategist at Societe Generale, in a note on Monday. Markets, which had been apprehensive about the possible inflationary effects of tariffs and the magnitude of the U.S. budget deficit, reacted positively to Bessent's nomination. While it remains to be seen whether Bessent can help the U.S. achieve a 3% GDP growth and a 3% budget deficit, his selection has nonetheless uplifted market sentiment.

In a prior interview with CNBC this month, Bessent assured that inflation was not on Trump’s agenda. "I guarantee you, the last thing [Trump] wants is to cause inflation," Bessent declared. He also suggested that any tariffs should be introduced gradually to mitigate economic disruptions.

The market focus will be on several key economic indicators during this shortened trading week, with markets closed on Thursday for Thanksgiving and an early closure on Friday. On Tuesday, the minutes from the Federal Reserve's latest policy meeting will be released, along with the S&P CoreLogic Case-Shiller national home price index for September. However, the October personal spending and income report, set for Wednesday, will be of particular interest. This report includes the personal consumption and expenditure (PCE) price index, which is the Fed's preferred metric for inflation. Economists predict year-over-year core level increases of 2.8%, excluding food and energy prices, and a 2.3% rise at the headline level, as estimated by Dow Jones last Friday.

As the final PCE report preceding the Federal Reserve's December meeting, this data will be closely scrutinized for clues about the central bank's next policy actions.