U.S. Treasury Secretary Scott Bessent last week on Fox Business said that when President Donald Trump talks about wanting lower interest rates, he’s referring to the yield on the 10-year Treasury, not the short-term rate set by the Fed.
Bessent said of President Trump: “He wants lower interest rates, he is not calling on the Fed to lower the rates. He believes that if we…deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves and the dollar will take care of itself.”
Note: Since Trump’s return to the White House on January 20, the 10-year yield, which had risen to about 4.8%, has “fallen to around 4.4% recently, reversing some of the rapid increases seen last fall, ” Reuters reports.
Larry Summers, who served as Treasury Secretary during the Clinton administration and Director of the National Economic Council during the Obama administration, responded to Bessent’s comments: “The Treasury Secretary has suggested 10 year rates as an objective of policy. Barring financial accident or recession, I expect rates to rise significantly.”
We are now in riskiest period for inflation policy since the early Biden Administration.
Even without tariffs, immigration restrictions, deficit bloat and attacks on the Fed there would be serious grounds for inflation worry
— Lawrence H. Summers (@LHSummers) February 12, 2025
Summers added: “We are now in riskiest period for inflation policy since the early Biden Administration. Even without tariffs, immigration restrictions, deficit bloat and attacks on the Fed there would be serious grounds for inflation worry.”
Note: Summers and four other former Treasury Secretaries (Rubin, Geithner, Lew and Yellen) wrote an op-ed in The New York Times (Our Democracy Is Under Siege) to voice alarm “about the risks of arbitrary and capricious political control of federal payments, which would be unlawful and corrosive to our democracy.”
Billionaire financier Dan Loeb of Third Point — who donated to the presidential campaign of his Columbia classmate Barack Obama and is now voicing support for Trump and Elon Musk on X — replied to Summers.
#Unclelarry what are the “serious grounds for inflation worry” you see other than inflation the issues you listed above? Other than a few idiosyncratic items in this AM’s print —used car prices due to hurricane, eggs due to Bird flu, seemed pretty uneventful as confirmed by…
— Daniel S. Loeb (@DanielSLoeb1) February 12, 2025
Loeb, 63, who has been addressing Summers, 70, as “Uncle Larry” on X (without context) wrote:
“What are the ‘serious grounds for inflation worry’ you see other than inflation the issues you listed above? Other than a few idiosyncratic items in this AM’s print —used car prices due to hurricane, eggs due to Bird flu, seemed pretty uneventful as confirmed by market move once the weak sisters were pushed out of the way.”
Note: “Weak sisters” is a Wall Street term used to describe underperforming securities, businesses, or economies. (It can also refer to hedge funds that sell higher quality debt to raise capital.)
On Saturday it was reported that Loeb’s Third Point LLC “significantly ramped up its stakes” in Q4 2024 in companies owned by fellow MAGA convert billionaires — Elon Musk‘s Tesla Inc. (25%) and Mark Zuckerberg‘s Meta Platforms (22%).
Before Zuckerberg jumped on the Trump train (after he won the election), Loeb “had previously slashed his Meta holding by over 50% in the third quarter of 2024.”