"U.S. Economy in an 'Upward Cycle'"...Treasury Secretary Bessent Confident Ahead of Midterms

Bessent Appears on Fox News Morning Show
"Record High in Dow Is Proof of an Economic Upward Cycle"
Subtle Pressure on Kevin Warsh Over Interest Rate Policy
China Blamed as the Cause of Gold Price Volatility

Secretary of the Treasury Scott Bessent expressed confidence in the U.S. economy ahead of the November midterm elections. He also pointed to China as the cause of the recent sharp volatility in gold prices.

On the 9th (local time), Secretary Bessent appeared on Fox News' "Sunday Morning Futures" and, referring to the fresh record high of the Dow Jones Industrial Average on the 6th (local time), said this was evidence that the U.S. economy is entering an "upward cycle" in which ordinary Americans will benefit.

Regarding the Federal Reserve's policy, Secretary Bessent said that if the central bank moves to reduce its balance sheet (quantitative tightening), it will proceed very cautiously. "I do not think the Fed will move hastily," he said, noting that "the Fed has already shifted to an ample-regime policy, and this regime structurally requires a larger balance sheet," and predicting that the Fed will likely stand pat and watch developments for at least a year before deciding on a direction.

He also mentioned Kevin Warsh, whom President Donald Trump has nominated as the next Fed Chair. Secretary Bessent said, "He will operate in a very independent manner, but at the same time he will keep in mind that the Fed is an institution that has a duty to be accountable to the American people and to justify its policies to them."

Earlier, at a Senate hearing, Secretary Bessent told lawmakers that whether President Trump would sue Warsh if, once confirmed, he failed to carry out the interest rate cuts preferred by the president would be "up to the president's decision."

When Senator Elizabeth Warren criticized his answer, Secretary Bessent explained that the remark stemmed from one of President Trump's jokes. He then defended Warsh's qualifications and underscored President Trump's expectation that Warsh will share his views on interest rate policy.

He further said that overheated trading in the Chinese market has contributed to the recent volatility in international gold prices. When asked about last week's sudden plunge that halted the rally in the precious metals market, Secretary Bessent said, "With regard to gold price movements, the situation inside China is becoming somewhat unruly," adding, "Chinese authorities are now in a position where they have to tighten margin requirements."

He added, "To my eyes, gold prices appear to be showing the classic pattern of a speculative blowoff."