It won't be easy for Bessent to fix US finances but he should

Trump's chosen Treasury secretary will face a daunting challenge

- Bill Dudley

Scott Bessent, President-elect Donald Trump's nominee for US Treasury Secretary, will face two big challenges if confirmed by the Senate: Ensuring that the world's largest government-debt market functions properly, and pursuing a fiscal policy that doesn't send the country's debt-service costs soaring. Neither task will be as easy as stock and bond investors seem to believe.

It's hard to overstate the importance of the market for US Treasury securities. It provides a benchmark for prices of stocks and bonds around the world and determines the cost of financing the US budget deficit. To those ends, it must be deep and liquid—able to handle large trading volumes without undue volatility. But it remains vulnerable to turmoil. US deficit spending has vastly increased the volume of Treasury securities outstanding, dwarfing the balance sheets of the financial institutions at the center of the market. Meanwhile, authorities lack the proper tools to prevent dysfunction.