The United States Secretary of the United States, Scott Besent, said Wednesday that the Trump administration aims to reduce loan costs in the economy by reducing the 10 -year treasure yield.
“He and I are focused on the 10 -year treasure,” Besent told Fox Business when asked about plans to reduce interest rates. “He is not asking the lowest interest rates,” Besent added.
The 10 -year yield, the so -called risk -free rate, influences most long -term loans in the economy, including mortgages and commercial loans. Therefore, a 10 -year performance decrease encourages loans and investment, increasing risk taking and financial markets.
Therefore, 10 -year performance softening is generally considered optimistic for risk assets, including Bitcoin (BTC). Trump plans to reduce performance by controlling inflation, which will probably be a good omen for BTC and reducing the budget deficit, which can be a wind against risk.
“The energy component for them is one of the safest indicators for long -term inflation expectations,” Besent said, reiterating that increasing energy supply will help reduce inflation.
In equal conditions, on equal terms, the lowest inflation would allow the Federal Reserve (FED) to continue reducing rates, which are still in restrictive territory. That could increase the bullish impulse in risk assets. Since September, the Fed has dropped the reference loan cost in 100 basic points to a range of 4.25% -4.5%.
Meanwhile, Besent’s strategy to inject a downward pressure on the 10 -year yield also implies setting the enormous budget deficit through reduced fiscal expenditure. The reduction of the deficit would mean less bond supply, greater prices of the lowest bonds and yields.
That said, the alleged fiscal expense out of control of the Biden administration compensated for high food rates and greased financial markets. Therefore, any cut in spending could destabilize risk assets, including cryptocurrencies.
“Of course, obtaining the 10 -year performance on a road down involves movements to improve the fiscal position of the United States, as well as inflation. So far, we have had their partner, musk, reducing federal government programs such as USAID , federal employees and such.
“The majority of American spending is in medical care, social security and defense. Will Trump inflict the pain that his approach seems to imply? There is hardly a politician who would do it,” Sheridan added.
Enjoy the lowest movement while hard
The 10 -year yield has decreased by 38 basic points to 4.42% as the price of markets in lower energy prices and non -inflationary growth, according to Besent.
ING analysts, however, do not see a sustained fall.
“We also claim that there is no great space in the 10 -year disadvantage. It needs a better reason than a 10 -year rate.
Ing added that it is difficult to see a great driver for a lower performance of 10 years, apart from a great potential success of the Government’s efficiency department, or Dux, created to reduce the overthrown fiscal expense and reduce federal regulations.
