Traders Cheer Trump's Treasury Choice

Traders Cheer Trump’s Treasury Choice – Stocks and Treasuries rose as traders welcomed Donald Trump’s selection of Scott Bessent for Treasury Secretary. They view this as a prudent choice that will bring more stability to the US economy and financial markets.

US equity futures increased by at least 0.5%, while the yield on 10-year Treasuries fell six basis points to 4.34%. The dollar declined, and Bitcoin rebounded after its drop over the weekend.

These market movements represent a shift away from some aspects of the so-called Trump Trade, which included a rising dollar and a rallying Bitcoin. The diminishing enthusiasm for these assets comes as traders lower their expectations regarding the president-elect’s plans to reduce taxes and increase tariffs—policies that could keep interest rates high and support the dollar.

Bessent’s nomination has alleviated concerns about the incoming president’s inflationary agenda, which had previously led to a selloff in government bonds and pushed the benchmark Treasury yield to a four-month high. Bessent, the Key Square Group hedge fund manager, has indicated that he will support Trump’s tariff and tax cut proposals, but investors expect him to prioritize economic stability and market confidence.

Dollar Rally Over?

The dollar recorded its longest stretch of weekly gains in over a year on Friday, driven by concerns about a potential global trade war that is affecting currencies worldwide. President Trump has threatened to impose a 60% tariff on Chinese imports and a 10% tariff on goods from all other countries.

Bessent’s nomination, which requires confirmation by the U.S. Senate before he can officially take the position, contrasts with Trump’s selection of several unconventional candidates and loyal supporters for other key roles. Other notable contenders included former Federal Reserve board member Kevin Warsh and Trump transition co-chair Howard Lutnick, who received support from Elon Musk.

Despite the fluctuations, the dollar’s gains over the past eight weeks are unlikely to be entirely reversed. Speculative traders increased their bets on dollar appreciation in the week ending November 19 to the most bullish level since late June, according to data from the Commodity Futures Trading Commission.

EURUSD Hovering Near 1.05

After declining to its lowest level since November 2022 on Friday, reaching as low as 1.0337, the pair quickly rebounded, rising to as high as 1.0490 during the European session earlier today. The decline on Friday was driven by much weaker-than-expected Services PMI data in Europe, raising expectations for faster and potentially larger rate cuts by the ECB in upcoming meetings. This marked the first weak outcome in some time. Additionally, technical indicators are heavily oversold, suggesting that the Euro may have limited room for further decline. A break above 1.05 would be the first sign of potential further gains ahead.

Gold Below 2700

Gold started the week on a lower note after closing the previous week’s trading at 2717, marking five consecutive days of gains. The recent decline appears to be linked to the potential ceasefire in Lebanon. However, technical indicators remain bullish across most timeframes, suggesting that this dip is merely a short-term retracement.

Traders should pay close attention to the weekly and monthly closing figures, as they indicate a possible continuation of the current trends in the coming weeks. If gold stabilizes above 2700, it could pave the way for further gains, potentially reaching 2720 and even 2740 once again.

Crude Gearing Up

Brent Crude closed last week’s trading above $74.00 for the first time since early November, breaking through multiple resistance levels and a daily trendline. This could signal the start of a new upward trend. Earlier today, it tested the $75.00 resistance before easing back to around $74.40.

It appears that this may be a short-term retracement before the upward trend continues, and the downside movement is likely to remain limited above $73.00 for now. Looking ahead, the next resistance area is at $75.85. If this resistance is broken, it could open the door for further gains, potentially reaching $77.30.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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