Analysis of Scott Bessent's '3-3-3 Policy' | Interest Rate Stability and Investment Opportunities

[Scott Bessent and the Butterfly Effect of the 3-3-3 Policy]

As President-elect Donald Trump nominates Scott Bessent as the next Treasury Secretary, global financial markets are breathing a sigh of relief. A former hedge fund manager and a so-called "Fiscal Hawk," he is evaluated as a figure who will balance Trump's radical tariff policies with market realities. In this post, we will analyze his core pledge, the "3-3-3 Policy," and forecast its potential impact on future US Treasury yields and the KRW/USD exchange rate.

Will Scott Bessent's '3-3-3 Policy' Save the Market?

1. Scott Bessent: Why Wall Street Welcomes Him

Scott Bessent is a veteran investor from the 'George Soros' fund and currently serves as the CEO of Key Square Group. The reason the market is paying attention to him is because of his "market-friendly rationality." While supporting Trump's tariff policies, he argues that tariffs should be used as "leverage at the negotiation table" rather than indiscriminate weapons. This has given a strong sense of relief to Wall Street, which was concerned about a resurgence of inflation due to trade wars.

In particular, he refers to himself as a "deficit-hating hawk" and has criticized the Biden administration's loose fiscal spending. This is interpreted as a will to prevent tantrums in the bond market by controlling the volume of government bond issuance, raising expectations that he will play the role of a "Shadow Fed Chair."

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2. Core Roadmap: Analysis of the '3-3-3 Policy'

The gist of the economic policy presented by Bessent is summarized by the number '3', or the three goals of the "3-3-3 Policy." It is an ambitious plan to achieve seemingly conflicting goals: pursuing growth while taming inflation.

Category	Content	Economic Implications
3% Growth	Achieve GDP 3% through deregulation and tax cuts	Increase in corporate profits and stock market boost
3% Deficit	Reduce budget deficit to 3% of GDP (currently 6~7%)	Reduce bond issuance, stabilize interest rates
3 Million Barrels	Increase daily oil production by 3 million barrels	Drop in energy prices → Suppress inflation

The most important point here is the reduction of the fiscal deficit to 3%. This is a key mechanism to dispel market fears that Trump 2.0's tax cuts might harm fiscal soundness. Also, increased energy production can be a powerful tool to lower oil prices and break inflation expectations.

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3. Market Outlook: Where are Rates and Exchange Rates Going?

Bessent's emergence is having an immediate impact on macro indicators. The implications of this phenomenon, called the "Bessent Effect," for Korean investors are as follows.

(1) US Treasury Rates: Expecting Downward Stabilization

Immediately after the news of his nomination, the US 10-year Treasury yield showed a downward trend. The signal that he will control fiscal spending to prevent an oversupply of government bonds is lowering the "Term Premium." If interest rates stabilize, an environment favorable to growth stocks like tech shares will be created, and bond investors will have an opportunity to avoid a worst-case crash.

(2) FX Market: Easing of Strong Dollar Pressure

Although the fear of "King Dollar" dominated the market right after Trump's election, Bessent takes the stance that he "does not prefer a weak dollar, but is also wary of an excessively strong dollar." Above all, the fact that he stated he would implement tariffs "gradually" is a factor that reduces volatility in the exchange rate market.

Therefore, the KRW/USD exchange rate is likely to show a range-bound flow with a limited upper end rather than a one-sided rise. However, we must keep in mind that if the US "3% Growth" is realized, it will be difficult for the dollar to turn sharply weak due to the "American Exceptionalism" of the US economy.

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4. Conclusion: Prepare for 'Orderly Trumpism'

Scott Bessent is a key figure who will turn the uncertainty of the Trump administration into a "predictable risk." If his 3-3-3 policy works successfully, we may expect a Goldilocks scenario of "Low Interest (Stable) - High Growth." However, political noise during policy implementation or oil price fluctuations remain risk factors.

Key Summary:
Bessent's "3-3-3 Policy" prioritizes stabilizing Treasury rates through fiscal soundness and increased energy production. This is expected to act as a boon for the stock market and a stabilizing factor for exchange rates.

The content of this blog is for reference only for investment judgment, and investment decisions must be made under the individual's own judgment and responsibility. Under no circumstances can the information in this blog be used as evidence of legal responsibility for investment results.