US: Treasury Sec Bessent On A Strong Dollar, Tariffs, Issuance Outlook

(MNI New York): Tsy Sec Bessent speaks on Bloomberg TV on a wide variety of topics, reiterating that the Trump administration would uphold the US's "strong dollar" policy, taking a hard line on Chinese economic policy and the US response, discounting the inflationary impact of tariffs, and underlining Wednesday's Refunding guidance that Treasury ssuance sizes are not set to rise in the near future.

• Asked what a "strong dollar" means to him: "A strong dollar really means four things. When we think about a fiat currency, a piece of paper's credibility, a strong dollar is credibility, and a rule of law backing that up. Two, it means a composite price on the screen, the dollar index, is the dollar moving up against that. Three, it is a bilateral price. What is important to remember is the dollar is either weak or strong versus something else. We want the dollar to be strong. What we don't want is for other countries to weaken their currencies to manipulate their trade. And fourth, we want to have the best policies that create the environment for a strong dollar."
• Asked about whether other countries are manipulating their currencies right now: "We will wait until the [April 1] study comes out, but intuitively, you and I could agree, when you see the accumulation of these large surpluses, there is not a free-form trading system that is growing. It could be due to the level of the currency, could be due to trade restrictions, it could be due to some interest-rate repression policy. It can be any of those." Asked if China or other countries are being watched, Bessent says: "We will see on April 1. As you know, China is the most unbalanced economy in the history of the world. They are in a deep recession right now. They are experiencing deflation, and they are trying to export their way out of that. We cannot allow that. We want fair trade. Part of that is taking a strong position on the currency and the terms of trade."
• On Treasury issuance, echoes the February Refunding guidance (presumably he's talking about the third quarter of the fiscal year, not the calendar year): "I think the good news is the trajectory of the borrowing is dropping. I was happy to see that, one of the few surprises. The trajectory is good. The government is well-financed until the end of the third quarter. I believe, as it becomes apparent that the President's agenda is working, we will see a great deal of non-inflationary growth. I think that will help us calibrate what the debt policies should be. But I don't foresee any changes in the issuance for this -- for the foreseeable future."
• On tariffs: " I am not sure where this narrative, the country putting on the tariffs, that it is inflationary, comes from. We could have a small one-time price adjustment, as we saw in Trump 1.0, though deregulation and the other policies stayed right around the Fed's target level. I am unconcerned about that. Especially with China now, given all of their excess capacity, no matter the level of the tariffs, they will end up eating quite a bit."
• Bessent largely repeats his previous comments on interest rates, saying the administration is  "not focused on whether the Fed will cut, not cut" but rather on "how to get the whole curve down", specifically mentioning the 10Y Treasury yield which "I believe, is the important price to focus on, mortgages, long-term capital formation. I think with the President's policies of energy dominance, deregulation, noninflationary growth, I think the 10-year will naturally come down. On top of it, what if we do get some big savings on the spending side from the DOGE programs?"