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The nomination for Treasury Secretary is one of the highest-profile cabinet picks for any incoming president, especially if they’ve run on promises to improve the economy. So, it’s worth examining what a Treasury Secretary actually does now that President-elect Donald Trump has chosen hedge fund manager Scott Bessent.

For starters, the secretary is the president’s lead economic adviser, so they are not only one of the chief salespeople for a president’s economic agenda, but they can have a lot of influence over it. (Many credited Steven Mnuchin, the secretary during Trump’s first term, as instrumental in getting the first massive COVID-19 relief legislation through.)

Bessent, who must still have his role confirmed by the Senate, is already being celebrated on Wall Street and by business leaders because he favors reining in deficit spending and softening Trump’s approach to tariffs, according to press reports. To encourage more manufacturing in the U.S., Trump has said companies importing goods from China and other countries will face steep tariffs, but many fear that will drive up the prices consumers have to pay for those goods.

The Treasury Department manages all federal finances, collects tax revenue (the IRS is part of the Treasury,) regulates banks, and oversees the actual printing of dollars. Another key role is selling and managing public debt such as Treasury bills and bonds so that the government can pay its bills. That means it’s the secretary’s problem whenever the U.S. hits the so-called debt ceiling, the self-imposed cap on the amount of money the country can legally borrow. After fierce debate, Congress last suspended the ceiling in June of 2023 and will need to raise or suspend it again in January to avoid a default.

So what? The Treasury Secretary has a potentially enormous influence on a wide range of financial fronts — from the prices you pay for appliances, toys, and clothes to your investments to how the government spends the money it collects from income taxes. With President Trump promising a break from government business as usual, Bessent will have all eyes on him.

Related Reading

•   What Trump’s Pick for Treasury Secretary Could Mean for Global Markets (CNBC)

•   3 Urgent Tasks Awaiting Trump’s Pick for Treasury Secretary (CNN)

•   After Flurry of Cabinet Picks, Trump Rethinks Candidates for Treasury Secretary (The New York Times)

photocredit: iStock/Douglas Rissing

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

Investor appetite for risk-taking was unleashed in the aftermath of the 2024 presidential election. U.S. stocks had their best month in a year, with optimism over the coming administration’s policy stances lifting the more cyclical and speculative parts of the market. International markets were less fortunate, as appreciation of the dollar and the potential for tariffs weighed on their prospects. U.S. economic growth remained solid, though high Treasury yields and mortgage rates continue to pose challenges to the housing market. Against this backdrop, the Federal Reserve lowered interest rates by 25 basis points again, as it continues to normalize monetary policy.

Macro

• The Fed lowered the fed funds rate by 25 basis points to a target range of 4.50%-4.75%.

• Fed officials discussed the possibility of lowering the overnight reverse-repo rate by 5 basis points, which would effectively increase liquidity by making it less attractive to park cash with the Fed.

• Initial jobless claims fell to 213k, the lowest level since April, while continuing claims rose to 1.907m, the highest level since November 2021.

• New home sales declined to 610k in October versus consensus of 725k, the biggest downside surprise since March 2014.

• Excluding defense and aircraft, capital goods orders fell 0.2% in October versus an expected increase of 0.1%, while the prior month’s increase was revised down from 0.7% to 0.3%.

• The U.S. Dollar Index rose from 104.0 at the start of the month to 107.6 on November 22, its strongest level since last November, before slightly retreating.

Equities

• Buoyed by post-election optimism around looser regulations, U.S. stocks had their best month since last November.

• Small-cap growth stocks returned 12.3%, their best month since November 2020 when vaccine news boosted investor sentiment.

• Dollar strength hurt international stock performance, with both developed and emerging markets negative on the month.

• Q4 earnings expectations were revised down by 0.8%, with Materials (-3.8%), Energy (-3.1%) and Consumer Staples (-2.2%) seeing the biggest downward revisions.

Fixed Income

• With the result of the 2024 presidential election, the MOVE Index (i.e. interest rate volatility) declined from 135.2 to 95.2, the biggest single-month drop since November 2020.

• Investment grade and high yield credit spreads narrowed to 74 and 253 basis points, respectively, on November 12, the narrowest levels since before the 2008 Financial Crisis.

The Trump Trade

One of the most unprecedented presidential elections in history finally came to a head last month, with former President Donald Trump emerging as the winner. Policy changes are likely as a result, though the exact mix is uncertain. The market reaction has been confident and optimistic though.

While the S&P 500 rose by a robust 2.5% the day after the election, the cyclical bellwethers of Financials, Consumer Discretionary and small-cap growth stocks jumped 6.2%, 3.6%, and 5.4%, respectively. Bitcoin also skyrocketed, but its November return of nearly 40% would have taken it literally off the chart above.

Have things fundamentally changed enough to justify the price action? Not really. But investors believe they could. The belief that the incoming administration will be more pro-business through deregulation and lower taxes is what helped unleash animal spirits. And while more trade tariffs would likely weigh on markets, investors mostly see these threats as a negotiating tool for now. Crucially, the only way to disprove current investor expectations is for time to pass and for us to see what will come. That could keep the rally going, at least for now.

Election Implications

There were other elections besides the presidency, however. On the congressional side, interpreting the election results requires some nuance. The Republican party was able to maintain control of the House (albeit with an extremely narrow margin), while retaking the Senate. So, while Republicans are technically in the driver’s seat for the next two years, they can’t afford any defections within the party if the Democrats are unified in opposition.

Environments like this typically mean less risk of big changes (i.e., gridlock), but that typical pattern might not hold this time since some provisions from the 2017 Tax Cuts and Jobs Act expire at the end of 2025. According to KPMG, the expirations would effectively raise taxes by over $4 trillion, so there could be considerable pressure to address it.

The debt ceiling limit will also be reinstated on January 1. Somewhat paradoxically, this would be a temporary liquidity boost for markets until it’s resolved: Instead of the private sector having to absorb Treasury debt issuance (i.e. money would flow from the private sector to the government), the U.S. Treasury would draw down the cash it has in the Treasury General Account (i.e. money would flow from the government to the private sector). Although there is wind at the market’s back right now, the uncertain outlook will likely keep the prospect of volatility going into next year.

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Performance data quoted represents past performance. Past performance does not guarantee future results. Market returns will fluctuate, and current performance may be lower or higher than the standardized performance data quoted.

How It Works is an ongoing series here on our blog, exploring and demystifying topics about which we hear often from our members and the public. Today, we’re taking a look at how SoFi makes money.

[UPDATED 11/21/2024 to include additional information on how SoFi Invest makes money.]

Dear SoFi, I’m overwhelmed by my debt. I don’t know how to get my finances under control. Can you help me?

Personal debt is as American as apple pie at a bake sale.

Midway through 2024, total U.S. household debt reached an all-time high of $17.8 trillion, according to the Federal Reserve Bank of New York. And that enormous sum is spread pretty broadly across the population: Two-thirds of Americans have some personal debt, and the average amount people owe is $22,713,
according to a 2024 Northwestern Mutual study.

Meanwhile, the average American pays $1,225 toward debt each month, which would eat up more than 25%
of the median U.S. monthly income of $4,660. And these are just rough numbers; for many, the financial
pressure is even greater. Is it any wonder that 90% of us are stressed about money, according to research from Thrive Global and Discover?

Facing your debt head-on can be extremely challenging. And yet it’s really the only way to bring about change. Here’s a quick overview of how you might do it.

First, write down what you owe. Sort your debts by interest rate. If you crave the satisfaction of completing a task, you can elect to pay off a smaller debt completely. Or you can tackle the debt with the highest interest rate first, which usually makes the most financial sense.

This is not rocket science. And it’s not easy, either. But setting a goal and then hatching a plan that is integrated into your budget will help you climb out of debt. In fact, taking the first step may provide some real relief, emotional and financial.

Here are some commonly used strategies for paying down debt:

•   Debt snowball: Those who struggle with discipline may be able to build some momentum by paying off their smallest debt first. The satisfaction may help sustain your efforts. (Just remember to continue making the minimum payments on your other debts in the meantime.)

•   Debt avalanche: From a financial perspective, this is the best strategy for most people. It’s simple in concept: Divert as much as you can reasonably manage toward the debt with the highest interest rate. The trick is sticking with it. (Continue making the minimum payments on all your other debts.)

•   Debt fireball: Identify your “good debt” – that is, loans or mortgages you’ve taken out to finance purchases that may appreciate, like a home. Then list out your “bad debts,” which you racked up to pay for items that usually lose value such as clothing, furniture, or vacations. Pay down the bad debt first, then move on to the good debt.

•   Refinance: Interest rates aren’t always set in stone, and there are a number of ways to refinance your debt – using a loan or credit card, for example. If you can get a lower interest rate, it may be a savvy move. There may be drawbacks, however. Some 0% balance transfer cards charge fees, and the interest-free payback period typically lasts three to 18 months. Once it ends, you’ll need to make sure your debt is paid off, or you may be subject to a very high interest rate. So, refinance carefully and in the context of a practical payback plan.

•   Consolidate: Transferring a handful of different debts into one can simplify things considerably. A SoFi personal loan can be used to consolidate debts with no origination fees, no prepayment fees, and no late fees.

Learn more about creating a debt reduction plan.

Digging out of debt isn’t easy. It may require you to adjust your budget until you get back on track. For example, if you follow the 50/30/20 method – where you spend 50% of your income on needs, 30% on wants, and 20% on savings – you could divert that 20% to additional debt payments. And I’d also recommend that you stop using credit cards.

Setting achievable goals will help you stay motivated. Stick with it and celebrate your wins along the way. With some time and discipline, you can be debt-free. (Almost) Easy as pie.

In financial health,
Kendall Meade,
CERTIFIED FINANCIAL PLANNER®

photocredits: iStock/SrdjanPav

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

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