Scott Bessent was asked a yes-or-no question. He chose a third option: "That's not necessarily so."
Brian Sullivan of CNBC asked whether future Fed hikes would be a policy error. Bessent had a clear path to "no." He didn't take it. He took the scenic route.
Consider the setting. The Fed had just held rates steady, hours earlier. A month before that, it raised them for the first time in three years. Bessent is on record loving Chair Kevin Warsh. He said Warsh is off to a "great start." He did not say the great start couldn't include a hike.
So the man who works for the president who wants cheaper money is now pre-clearing the opposite. Bold. Like a lifeguard saying drowning isn't necessarily bad for swimmers.
He also asked the Fed to keep an "open mind" about the energy shock being transitory. The war with Iran has cut crude output. Inflation is drifting away from 2%. Bessent wants the committee to stay open-minded about that. The committee has a December meeting, and futures traders expect a hike. The open mind has a calendar.
He also cited the ECB hiking into an energy shock, then mentioned September 2008. Nobody asked for the 2008 reference. It arrived anyway, like a cousin at Thanksgiving.
The 10-year yield sits above 5%. Bessent says it "never looked back" after the 2024 cut. Looking back is all anyone at the Treasury does now.
Retail traders will read this as a signal. Please don't. A man said "not necessarily." You cannot trade that. You cannot short that. You cannot even put it on a candlestick chart, though I'm sure you'll try, with a little yellow arrow and the word "pivot."
Some of you will buy calls on the phrase itself. You will lose money on a double negative.
Bessent said a hike isn't necessarily a mistake. Neither is your options account, necessarily. The statement is just as accurate, and you can check the balance yourself.
Photo by Carl Barcelo on Unsplash
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