June 30, 2025 • 14 mins
Treasury Secretary Scott Bessent indicated it wouldn’t make sense for the government to ramp up sales of longer-term securities given where yields are today, though he held out hope that interest rates across maturities will be falling as inflation slows. He spoke to host Sonali Basak about the yields, as well as the future successor for Fed Chair Powell, Trump's tax bill and the latest on trade deals.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. I'm Shinauli Bassk and
we are now joined by US Treasury Secretary Scott Bessant.
Just as the Senate has begun voting on what's known
as the Big Beautiful Bill. You look at the latest
version of the tax bill, the big question that remains
(00:23):
is the GOP holdouts. What kind of deal can be
cut with those holdouts and what are you and the
President prepared to offer for support.
Speaker 2 (00:30):
Well, I'm confident that the bill is going to progress
as is over the next few hours and it'll be
on the President's desk to sign on July fourth, so
Senate will vote pass it over to the House. We've
seen incredible leadership, and this is what leadership looks like.
Speaker 3 (00:48):
So President Trump.
Speaker 2 (00:51):
That the Speaker Johnson, Leader thoone, and at the committee level,
Senator Crapo and Chairman Jason Myth have been fantastic to
work with. And again it all goes back to leadership.
Speaker 1 (01:05):
Now, when it comes to the fiscal hawks, has the
administration made any assurances about executive orders or legislation down
the road to address the national debt load?
Speaker 2 (01:15):
Well, I think everyone believes that this is a start,
So it's an eleven percent cut in non discretionary spending
and we're going to go from there. So we didn't
get here all at once. We've gotten here twenty or
forty years, and we are going to bend the curve
bring the debt levels down. I'm a fiscal hawk. I've
(01:38):
had a lot of very good meetings with that group,
and I think we're all on the same page on
how to grow the economy while controlling and bringing down expenses.
Speaker 1 (01:50):
Now let's talk about some of the math there as well,
because if the GOP is right and the bill does
look to shrink the deficit, how will that affect treasure
issues over the next ten years? How does your map
square with the CBO, with Warren, with Yale, and even
the Bloomberg consensus of GDP projectors. You're economists that still
(02:13):
see growth under two.
Speaker 3 (02:14):
Percent, Well, I think that's just wrong.
Speaker 2 (02:17):
And you know, we can start with the CBO is
their model presumes one point eight percent forever and maybe
under democratic governments that's right. I think what we saw
under President Trump's first term is that we will get
a big the boost in the economy from the tax bill,
(02:38):
and we're going to have certainty.
Speaker 3 (02:40):
We're going to go.
Speaker 2 (02:40):
Back to one hundred percent expensing, so we are also
deregulating at the same time. So we saw it in
Trump one point zero. I think that we can see
it here. So I think we can really accelerate the
economy because the CBO model shows one point eight percent growth,
whether we have the biggest tax cut in history, or
(03:03):
we get this across the line and give companies and
consumers great certainty.
Speaker 1 (03:08):
You mentioned that the spending cuts were just a start.
Now which will prevail When you think about the cuts
specifically as it pertains to Medicaid, Will the House level
of cuts to Medicaid prevail or the Senate level? And
which one will the President support?
Speaker 3 (03:24):
We'll see.
Speaker 2 (03:26):
My sense is, and again I take exception to cuts.
We are actually bending the curve further out. We are
getting able body people back to work, and the most
needy will have greater benefits.
Speaker 1 (03:40):
Well, the main question too, is the benefits that are
being cut. What do you tell the nearly twelve million
people that are on the brink of losing access to Medicaid?
Speaker 2 (03:50):
Well, again that's not right. One four million are illegal aliens.
Then a huge percent of that are the able body
working people who will need to go back to work.
So we're going to have a work requirement and we'll
(04:11):
go from there. We are just going back to the
levels pre COVID.
Speaker 1 (04:16):
So given where the bill is, how does the latest
bill impact the trajectory of the debt and deficit in
your view?
Speaker 2 (04:25):
Well, again that I think as we accelerate growth and
increase growth, trajectory completely changes the debt dynamics. So what
we're focusing on is the debt to GDP. We're going
to start bringing that back down. We are going to
pull down the deficit to GDP, and I think we
(04:49):
will be turning both of those down.
Speaker 3 (04:51):
Over the next year.
Speaker 1 (04:53):
Does it give you, though, enough confidence to start turning
out the debt? At what point do you start issuing
at longer data maturities?
Speaker 3 (05:00):
Well, why would we do at these rates?
Speaker 2 (05:04):
We are more than one standard deviation above the long
term more than one standard deviation above the long term rates,
So why would we do that. The time to have
done that would have been in twenty twenty one, twenty two.
Speaker 1 (05:22):
So a lot of people in the market point out
to the success that has been in the bond market.
You have seen the ten year come down almost a
half a percentage point since the January highs. Where would
you like to see the ten year and where do
you think it could end by the.
Speaker 3 (05:37):
End of the year. Well, I think it's going to
depend on a lot of things.
Speaker 2 (05:42):
But I think that we could see a further lowering
up rates. I think inflation is very tame. I'm not
going to comment on FED policy, but I've said that
I am focusing on the tenure So as we inflation
come down, I think the whole curve could parallel shift down.
(06:05):
And I'll point out when everyone says the market, the
bond market's worried about this or that. In the US,
US is the only major bond market that has lower
tenure rates than any other country. Every other country the
rates are up.
Speaker 1 (06:24):
While we're talking about interest rates and the Federal Reserve,
it has been recently reported that you might be in
consideration for the job as the next FED chair. When
you've been asked about the likelihood recently, you said that
it's up to the president. Is it a job that
you would want.
Speaker 2 (06:39):
I will do what the president wants, but I think
I have the best job INBC. We're making a lot
of progress with the president's leadership. Think about it. We
are going to have the tax bill on his desk
by July fourth, We're going to be wrapping up the
trade talks. So I think we've had great moment minim
(07:00):
and we will be working on a chair Powell's successor
over the coming weeks and months.
Speaker 1 (07:11):
You had mentioned that an announcement could be as early
as October or November, and Powell's term ends in May
of twenty twenty six. How is the street supposed to
navigate between that announcement time and the time between the
term being over four Chair Powell, you are the one
I want to remind people that had brought up the
(07:31):
idea of a shadow fed chair prior to the election.
Is a new appointee supposed to be considered that shadow
fed chair?
Speaker 3 (07:38):
Well, not necessarily.
Speaker 2 (07:40):
We'll see there's a seat opening up, a fourteen year
seat opening up in January, so we've given thought to
the idea that perhaps that person would go on to
become the chair when Jay Powell leaves in May, or
we could appoint the new chair in May. Unfortunately, that's
(08:02):
just a two year seat.
Speaker 1 (08:04):
So ultimately, do you think that there could be some confusion.
Speaker 2 (08:08):
Well, I don't see why there would be confusion because
obviously there are people who are currently at the FED
who are under consideration. So why would there be confusion
if that you add another candidate in January?
Speaker 1 (08:25):
So? What about FED policy as it stands today? The
President has voiced his preference for lower interest rates. There
have been investors, but also most recently the Bank of
International Settlements warning about any inflation risks tied to the
tariff policy. Realistically, how much can the FED lower rates
this year? And what is the level and rate of
(08:46):
unemployment that would suggest a faster pace of rate cuts Economically?
What has to slow?
Speaker 2 (08:52):
Well, look, I said during my confirmation, I won't talk
about the mistakes the Fed's going to make.
Speaker 3 (08:57):
I'll only talk about the ones they have made.
Speaker 2 (09:00):
They made a gigantic mistake in twenty twenty two, And
as I like to point out, medical studies have shown
that people who fall tend to look at their feet,
which makes them fall more. And my worry here is
that having fallen down on the American people in twenty
twenty two, Feds now looking at their feet. We have
seen no inflation from tariff if we do which we
(09:24):
don't have to. Then they'd be a one time price adjustment.
Nothing is more transitory than that. So Team Transitory having
failed the American people in twenty two, they seem a
little frozen.
Speaker 3 (09:38):
At the wheel here.
Speaker 1 (09:41):
Part of this uncertainty does relate back to the trade deals.
You've set a deadline for July ninth with key trading partners,
or at least the administration in total has how many
of the key eighteen, the eighteen most important partners that
you have been speaking about have deals that will be
agreed to by that time.
Speaker 3 (10:00):
We'll see.
Speaker 2 (10:00):
I'm not going to negotiate on TV and let people
off the hook, but as always, there's going to be
a flurry going into the final week as the pressure increases.
Speaker 1 (10:09):
Well, can you tell us about what's coming out of
those deals? Are they inked deals or are they negotiations
for future deals?
Speaker 2 (10:17):
Well, what I can tell you is that the staff level,
whether it's a Treasury at USTR, at commerce, people who've
been around for twenty years are in amazement and they're
saying these countries are coming with offers that they can't believe.
So in terms of bringing down teriffs, non tariff trade barriers,
(10:40):
we're leaving a side currency the financing of the labor
and capital in an advantageous way. All these countries are
pulling back.
Speaker 1 (10:54):
So you've said that trade negotiations could be wrapped up
by Labor Day. How shoulds and nations impact It'd be
thinking about that July ninth deadline and could that be
pushed back to avoid going back to those April second
tariff rates.
Speaker 2 (11:10):
Well, that's going to be able to present a trump
and I'm not going to tell any country. We have
countries that are negotiating in good faiths, but they should
be aware that if we can't get across the line
because they are being with calcitrant, then we could spring
back to the April second levels.
Speaker 3 (11:29):
I hope that won't have to happen.
Speaker 1 (11:32):
So one other part of the tariff strategy that a
lot of investors have been asking about is related to
the housing affordability crisis. There's still Section two thirty two
tariffs being seen as it retains to lumber and timber.
Those are key materials for housing construction. Are you in
support of them ultimately? Given where we are in the
(11:53):
housing affordability.
Speaker 2 (11:53):
Crisis today, Well, I think it's important to break down.
So what we're negotiating now are the recip tariffs two
thirty two's take longer to implement, so you know, we'll
see what happens with those.
Speaker 1 (12:08):
Also on the housing market, what kind of timeline, Well,
first of all, is Fanny and Freddy going to be
privatized and what type of timeline would you look to
do that on while also ensuring that mortgage rates won't
skyrocket on the heels of such a plan.
Speaker 2 (12:23):
Well, let's work backwards on your question. Is any anything
we do, we will be focused on the mortgage rate,
the spread of mortgages over treasuries and ensuring that that.
Speaker 3 (12:35):
Does not move. But you know, I can tell you
that we have been.
Speaker 2 (12:39):
Busy with peace steels, trade deals, and tax deals and
once peace steals going well, tax deal done on July fourth,
a trade deal wrapping up midsummer.
Speaker 3 (12:53):
And then we will focus on Fanny and Fredy.
Speaker 1 (12:57):
One more question for you. Another thing that is making
its way through Congress is legislation as it pertains to cryptocurrency.
But right now stable coin. Will this bill help in
terms of making stable coins a bigger force in the
payments market and the treasury market. Will they be a
larger force of what absorbs new treasury supply.
Speaker 2 (13:21):
Well, what you're referring to as the Genius Act, the
Senate's passed.
Speaker 3 (13:25):
It is now with the House.
Speaker 2 (13:27):
President Trump, myself, much of the Senate leadership, and many
in the House are encouraging them to pass the Senate.
Speaker 3 (13:36):
Bill as is. I think we could have that also
done by mid July.
Speaker 2 (13:41):
And I think stable coins create an exciting new payment
rail and importantly it will be a source of demand
for the US treasury market because if you think about
it in terms of preference globally, would you rather have
a a private stable coin that's backed by US treasuries
(14:03):
with US best practices regulation, or would you rather have
an ECB or a PBOC central bank digital currency that
if you write a mean the ex post.
Speaker 3 (14:16):
The government can turn off.
Speaker 2 (14:18):
I think everyone is going to choose the US private
sector with US regulation all day, every.
Speaker 1 (14:23):
Day, Secretary BSST, we appreciate you joining us here in
our New York studio, that is the US Treasury Secretary
Scott Vessant
Bloomberg Audio Studios, Podcasts, radio News. I'm Shinauli Bassk and
we are now joined by US Treasury Secretary Scott Bessant.
Just as the Senate has begun voting on what's known
as the Big Beautiful Bill. You look at the latest
version of the tax bill, the big question that remains
(00:23):
is the GOP holdouts. What kind of deal can be
cut with those holdouts and what are you and the
President prepared to offer for support.
Speaker 2 (00:30):
Well, I'm confident that the bill is going to progress
as is over the next few hours and it'll be
on the President's desk to sign on July fourth, so
Senate will vote pass it over to the House. We've
seen incredible leadership, and this is what leadership looks like.
Speaker 3 (00:48):
So President Trump.
Speaker 2 (00:51):
That the Speaker Johnson, Leader thoone, and at the committee level,
Senator Crapo and Chairman Jason Myth have been fantastic to
work with. And again it all goes back to leadership.
Speaker 1 (01:05):
Now, when it comes to the fiscal hawks, has the
administration made any assurances about executive orders or legislation down
the road to address the national debt load?
Speaker 2 (01:15):
Well, I think everyone believes that this is a start,
So it's an eleven percent cut in non discretionary spending
and we're going to go from there. So we didn't
get here all at once. We've gotten here twenty or
forty years, and we are going to bend the curve
bring the debt levels down. I'm a fiscal hawk. I've
(01:38):
had a lot of very good meetings with that group,
and I think we're all on the same page on
how to grow the economy while controlling and bringing down expenses.
Speaker 1 (01:50):
Now let's talk about some of the math there as well,
because if the GOP is right and the bill does
look to shrink the deficit, how will that affect treasure
issues over the next ten years? How does your map
square with the CBO, with Warren, with Yale, and even
the Bloomberg consensus of GDP projectors. You're economists that still
(02:13):
see growth under two.
Speaker 3 (02:14):
Percent, Well, I think that's just wrong.
Speaker 2 (02:17):
And you know, we can start with the CBO is
their model presumes one point eight percent forever and maybe
under democratic governments that's right. I think what we saw
under President Trump's first term is that we will get
a big the boost in the economy from the tax bill,
(02:38):
and we're going to have certainty.
Speaker 3 (02:40):
We're going to go.
Speaker 2 (02:40):
Back to one hundred percent expensing, so we are also
deregulating at the same time. So we saw it in
Trump one point zero. I think that we can see
it here. So I think we can really accelerate the
economy because the CBO model shows one point eight percent growth,
whether we have the biggest tax cut in history, or
(03:03):
we get this across the line and give companies and
consumers great certainty.
Speaker 1 (03:08):
You mentioned that the spending cuts were just a start.
Now which will prevail When you think about the cuts
specifically as it pertains to Medicaid, Will the House level
of cuts to Medicaid prevail or the Senate level? And
which one will the President support?
Speaker 3 (03:24):
We'll see.
Speaker 2 (03:26):
My sense is, and again I take exception to cuts.
We are actually bending the curve further out. We are
getting able body people back to work, and the most
needy will have greater benefits.
Speaker 1 (03:40):
Well, the main question too, is the benefits that are
being cut. What do you tell the nearly twelve million
people that are on the brink of losing access to Medicaid?
Speaker 2 (03:50):
Well, again that's not right. One four million are illegal aliens.
Then a huge percent of that are the able body
working people who will need to go back to work.
So we're going to have a work requirement and we'll
(04:11):
go from there. We are just going back to the
levels pre COVID.
Speaker 1 (04:16):
So given where the bill is, how does the latest
bill impact the trajectory of the debt and deficit in
your view?
Speaker 2 (04:25):
Well, again that I think as we accelerate growth and
increase growth, trajectory completely changes the debt dynamics. So what
we're focusing on is the debt to GDP. We're going
to start bringing that back down. We are going to
pull down the deficit to GDP, and I think we
(04:49):
will be turning both of those down.
Speaker 3 (04:51):
Over the next year.
Speaker 1 (04:53):
Does it give you, though, enough confidence to start turning
out the debt? At what point do you start issuing
at longer data maturities?
Speaker 3 (05:00):
Well, why would we do at these rates?
Speaker 2 (05:04):
We are more than one standard deviation above the long
term more than one standard deviation above the long term rates,
So why would we do that. The time to have
done that would have been in twenty twenty one, twenty two.
Speaker 1 (05:22):
So a lot of people in the market point out
to the success that has been in the bond market.
You have seen the ten year come down almost a
half a percentage point since the January highs. Where would
you like to see the ten year and where do
you think it could end by the.
Speaker 3 (05:37):
End of the year. Well, I think it's going to
depend on a lot of things.
Speaker 2 (05:42):
But I think that we could see a further lowering
up rates. I think inflation is very tame. I'm not
going to comment on FED policy, but I've said that
I am focusing on the tenure So as we inflation
come down, I think the whole curve could parallel shift down.
(06:05):
And I'll point out when everyone says the market, the
bond market's worried about this or that. In the US,
US is the only major bond market that has lower
tenure rates than any other country. Every other country the
rates are up.
Speaker 1 (06:24):
While we're talking about interest rates and the Federal Reserve,
it has been recently reported that you might be in
consideration for the job as the next FED chair. When
you've been asked about the likelihood recently, you said that
it's up to the president. Is it a job that
you would want.
Speaker 2 (06:39):
I will do what the president wants, but I think
I have the best job INBC. We're making a lot
of progress with the president's leadership. Think about it. We
are going to have the tax bill on his desk
by July fourth, We're going to be wrapping up the
trade talks. So I think we've had great moment minim
(07:00):
and we will be working on a chair Powell's successor
over the coming weeks and months.
Speaker 1 (07:11):
You had mentioned that an announcement could be as early
as October or November, and Powell's term ends in May
of twenty twenty six. How is the street supposed to
navigate between that announcement time and the time between the
term being over four Chair Powell, you are the one
I want to remind people that had brought up the
(07:31):
idea of a shadow fed chair prior to the election.
Is a new appointee supposed to be considered that shadow
fed chair?
Speaker 3 (07:38):
Well, not necessarily.
Speaker 2 (07:40):
We'll see there's a seat opening up, a fourteen year
seat opening up in January, so we've given thought to
the idea that perhaps that person would go on to
become the chair when Jay Powell leaves in May, or
we could appoint the new chair in May. Unfortunately, that's
(08:02):
just a two year seat.
Speaker 1 (08:04):
So ultimately, do you think that there could be some confusion.
Speaker 2 (08:08):
Well, I don't see why there would be confusion because
obviously there are people who are currently at the FED
who are under consideration. So why would there be confusion
if that you add another candidate in January?
Speaker 1 (08:25):
So? What about FED policy as it stands today? The
President has voiced his preference for lower interest rates. There
have been investors, but also most recently the Bank of
International Settlements warning about any inflation risks tied to the
tariff policy. Realistically, how much can the FED lower rates
this year? And what is the level and rate of
(08:46):
unemployment that would suggest a faster pace of rate cuts Economically?
What has to slow?
Speaker 2 (08:52):
Well, look, I said during my confirmation, I won't talk
about the mistakes the Fed's going to make.
Speaker 3 (08:57):
I'll only talk about the ones they have made.
Speaker 2 (09:00):
They made a gigantic mistake in twenty twenty two, And
as I like to point out, medical studies have shown
that people who fall tend to look at their feet,
which makes them fall more. And my worry here is
that having fallen down on the American people in twenty
twenty two, Feds now looking at their feet. We have
seen no inflation from tariff if we do which we
(09:24):
don't have to. Then they'd be a one time price adjustment.
Nothing is more transitory than that. So Team Transitory having
failed the American people in twenty two, they seem a
little frozen.
Speaker 3 (09:38):
At the wheel here.
Speaker 1 (09:41):
Part of this uncertainty does relate back to the trade deals.
You've set a deadline for July ninth with key trading partners,
or at least the administration in total has how many
of the key eighteen, the eighteen most important partners that
you have been speaking about have deals that will be
agreed to by that time.
Speaker 3 (10:00):
We'll see.
Speaker 2 (10:00):
I'm not going to negotiate on TV and let people
off the hook, but as always, there's going to be
a flurry going into the final week as the pressure increases.
Speaker 1 (10:09):
Well, can you tell us about what's coming out of
those deals? Are they inked deals or are they negotiations
for future deals?
Speaker 2 (10:17):
Well, what I can tell you is that the staff level,
whether it's a Treasury at USTR, at commerce, people who've
been around for twenty years are in amazement and they're
saying these countries are coming with offers that they can't believe.
So in terms of bringing down teriffs, non tariff trade barriers,
(10:40):
we're leaving a side currency the financing of the labor
and capital in an advantageous way. All these countries are
pulling back.
Speaker 1 (10:54):
So you've said that trade negotiations could be wrapped up
by Labor Day. How shoulds and nations impact It'd be
thinking about that July ninth deadline and could that be
pushed back to avoid going back to those April second
tariff rates.
Speaker 2 (11:10):
Well, that's going to be able to present a trump
and I'm not going to tell any country. We have
countries that are negotiating in good faiths, but they should
be aware that if we can't get across the line
because they are being with calcitrant, then we could spring
back to the April second levels.
Speaker 3 (11:29):
I hope that won't have to happen.
Speaker 1 (11:32):
So one other part of the tariff strategy that a
lot of investors have been asking about is related to
the housing affordability crisis. There's still Section two thirty two
tariffs being seen as it retains to lumber and timber.
Those are key materials for housing construction. Are you in
support of them ultimately? Given where we are in the
(11:53):
housing affordability.
Speaker 2 (11:53):
Crisis today, Well, I think it's important to break down.
So what we're negotiating now are the recip tariffs two
thirty two's take longer to implement, so you know, we'll
see what happens with those.
Speaker 1 (12:08):
Also on the housing market, what kind of timeline, Well,
first of all, is Fanny and Freddy going to be
privatized and what type of timeline would you look to
do that on while also ensuring that mortgage rates won't
skyrocket on the heels of such a plan.
Speaker 2 (12:23):
Well, let's work backwards on your question. Is any anything
we do, we will be focused on the mortgage rate,
the spread of mortgages over treasuries and ensuring that that.
Speaker 3 (12:35):
Does not move. But you know, I can tell you
that we have been.
Speaker 2 (12:39):
Busy with peace steels, trade deals, and tax deals and
once peace steals going well, tax deal done on July fourth,
a trade deal wrapping up midsummer.
Speaker 3 (12:53):
And then we will focus on Fanny and Fredy.
Speaker 1 (12:57):
One more question for you. Another thing that is making
its way through Congress is legislation as it pertains to cryptocurrency.
But right now stable coin. Will this bill help in
terms of making stable coins a bigger force in the
payments market and the treasury market. Will they be a
larger force of what absorbs new treasury supply.
Speaker 2 (13:21):
Well, what you're referring to as the Genius Act, the
Senate's passed.
Speaker 3 (13:25):
It is now with the House.
Speaker 2 (13:27):
President Trump, myself, much of the Senate leadership, and many
in the House are encouraging them to pass the Senate.
Speaker 3 (13:36):
Bill as is. I think we could have that also
done by mid July.
Speaker 2 (13:41):
And I think stable coins create an exciting new payment
rail and importantly it will be a source of demand
for the US treasury market because if you think about
it in terms of preference globally, would you rather have
a a private stable coin that's backed by US treasuries
(14:03):
with US best practices regulation, or would you rather have
an ECB or a PBOC central bank digital currency that
if you write a mean the ex post.
Speaker 3 (14:16):
The government can turn off.
Speaker 2 (14:18):
I think everyone is going to choose the US private
sector with US regulation all day, every.
Speaker 1 (14:23):
Day, Secretary BSST, we appreciate you joining us here in
our New York studio, that is the US Treasury Secretary
Scott Vessant
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