Happy Monday!

This week is relatively quiet on the economic data front, with the main releases being the FOMC meeting minutes from the last meeting, Core PCE, and European inflation data to round off the week.

The most interesting development this week is how markets are reacting to the appointment of the new Treasury Secretary, Scott Bessent. Yields are down, gold is down, and equities are surging higher. Good news keeps coming for risk asset bulls at the moment.

We have dissected the most important topics and events this week for you to dive into on a rainy day in Copenhagen—enjoy!

Bessent as Treasury Secretary – Business as Usual as Musk Suggests?

Let’s start with the most important news of the past few days: Trump’s decision to nominate Scott Bessent as Treasury Secretary last Friday. This might be the most consequential decision, as Bessent will oversee Trump’s economic and regulatory agenda and manage the $28.6 trillion Treasury debt market. Interestingly, Musk has previously commented that Bessent’s appointment would signify “business as usual” rather than much-needed change—marking the first time since the election that the two might fundamentally disagree.

What Does This Decision Mean for Trade and Tax Cuts?

This nomination suggests that Trump will primarily use tariffs as a negotiation tool, with Bessent likely advocating for less severe tariffs. This approach could bolster the bond market, as shrinking inflation expectations nudge rates lower. Bessent also champions Trump’s goal of driving stronger economic growth to boost revenues and restore market confidence.

On Ukraine, Bessent inherits the responsibility of coordinating financial aid and sanctions against Russia. However, Trump’s intent to end the war quickly and reduce U.S. financial support introduces uncertainty about Bessent’s approach to this issue.

In energy policy, Bessent is expected to align with Trump’s agenda of ramping up fossil fuel production and rolling back clean energy subsidies—a stark contrast to recent policies favoring renewable energy investments and climate-focused initiatives.

Bessent’s views on the Federal Reserve have also sparked debate. His initial suggestion of appointing a “shadow” Fed chair to undercut Jerome Powell’s influence stirred controversy, though he has since abandoned the idea. Powell’s term, ending in 2026, ensures that the Fed-Bessent dynamic will be one to watch.

Despite Musk’s “business as usual” claim, Bessent’s tenure could bring significant changes beyond merely maintaining the status quo.

Markets are primarily reacting to Bessent’s “3×3 policy mix,” which boils down to:

• +3 million barrels of oil produced per day
• 3% long-term real GDP growth
• 3% budget deficit (currently 6.5–7%)