Bessent says oil prices set to decline, US bond market remains strong

Speaking on CNBC, Treasury Secretary Bessent made several remarks on the economy and policy:

• Oil prices are expected to fall.
• The President has indicated that Iran is not prepared to negotiate an agreement.
• Operation outcast will compel Iran to come to the bargaining table.
• The bond market is the most resilient in the world.
• A productive discussion took place with the PBOC governor last night.
• If there were issues with US bonds, investors would be selling them and buying other assets. The US bond market is the best performing.
• Regarding the US bond market, he does not believe he can alter the equilibrium price.
• The 10-year yield is at the same level as when the President assumed office.
• He met with his Canadian counterpart, stressing that the US is not at war with Canada.
• Canada was offered a trade deal better than any other country has received.
• Carney is not acting in the best interests of the Canadian people.
• He declined to speculate on the Federal Reserve chair's next move.
• Typically, the Fed does not increase rates during a supply shock.
• He believes the Japanese government and the Bank of Japan will take steps that lead to a rise in the yen.
• The yen market is now pricing in expectations.

The US dollar is edging slightly lower. Bessent's comment that the Fed traditionally avoids raising rates into a supply shock is the driving factor. Bessent and Warsh traveled to the G20 on the same flight; Bessent joked they discussed tennis, but this remark provides an excuse for the Chair to delay tightening. However, the decision is made by the committee.