Scott Bessent, the Treasury Secretary, discussed various economic matters, saying tariffs have not hurt the market. He prefers the market’s view over economists’ opinions and noted much of Vietnam’s trade involves transshipment from China, suggesting tariffs aren’t inflationary.
He mentioned Greer’s upcoming work on EU trade and warned countries their rates might return to prior levels. Regarding Japan’s election on July 20, Bessent is eager to see post-election results. He remarked on the UK’s perception as a favourable trade partner and noted many jobs from state and local governments.
Jobs Report and Its Variability
Though the jobs report is positive, Bessent highlighted variability due to timing issues, like teacher hires or payroll departures. He is hopeful about increased capital expenditures following the budget bill. He acknowledged there are many strong candidates for the Federal Reserve chair role and plans to address this in the fall.
Bessent’s comments did not contain groundbreaking news.
While Bessent’s comments lacked fresh revelations, they still offered a practical reference point. He drew a line between market sentiment and conventional economic models, siding firmly with what price action reveals rather than theory. His belief that tariffs haven’t fuelled inflation suggests that the mechanisms driving inflation right now may have shifted, or at least become more nuanced than traditional models account for. The observation that much of Vietnam’s trade relies on transshipment from China highlights just how tangled trade flows can be, weakening the argument that tariffs alone drive costs higher.
When he referred to Greer’s upcoming examination of EU trade, it hinted at a possible resurgence of attention on cross-Atlantic dynamics. Underlying this is the idea that current rates in different countries might not stay put. A warning, if subtle, that yields could revert to historical norms. For us, this means global fixed income could respond with sharpened volatility, especially if positioning is skewed toward a low-rate status quo.
Bessent also flagged Japan’s election this month as an event worth monitoring. Once political uncertainty lifts, any shifts in fiscal or monetary direction could ripple through yen positioning and JGB yields. Currency markets might not react day-one, but any hints of post-vote changes in policy tone could quickly change that. We’re watching for any signal that prompts rotation back into or away from Japanese assets.
Impact of the UK as a Trade Partner
On the UK, the comment about its reputation as a trade partner stood out. Not because it’s new, but because it suggests that amid broader geopolitical strains, some trade relationships continue to be seen as reliable. This stability helps keep sterling on steadier ground. That said, job market contributions from the public sector—particularly at the state and local level—are more transient. Teachers being hired or laid off according to the academic calendar can distort payroll trends. That variability makes headline figures more prone to misinterpretation, so reacting to a single print can be a misstep.
His optimism around capital expenditures following the budget bill shouldn’t be taken as a blanket surge. These commitments unfold gradually, and markets could begin to price in improved growth without waiting for firm data. We might want to examine not just who’s increasing spending but when that spend starts to influence activity measures.
Bessent’s confidence that there are several viable names for the Fed chair role is another pointer. With names circulating and a timeframe stretching into autumn, speculation may widen before it narrows. That opens the door for rate-sensitive instruments to respond to shifts in perceived dovishness or hawkishness. We should bear this in mind during late Q3 positioning.
Though lacking headline-making statements, these remarks collectively reaffirm a stance that markets matter more than predictions. The next few weeks should be approached with this in mind: less attachment to macro forecasts, more attention to where implied volatility picks up. Rates, currencies, and equity positioning all have threads here. It’s better to watch policy hints, election outcomes, and spending actuals than to rely on consensus outlooks.