US Treasury Secretary Scott Bessent said Wednesday that the Trump administration is aiming to reduce borrowing costs in the economy by lowering the dividend on the 10-year treasury.

“He and I are focused on the 10-year-old treasury,” Bessent Fox told Business when asked about plans to lower interest rates. “He doesn’t call for Fed to lower interest rates,” Bessent added.

The 10-year dividend, the so-called risk-free rate, affects most long-term loans in the economy, including priority loans and business loans. Thus, a declining 10-year dividend is encouraged to borrow and invest, increasing the risk of the economy and the financial markets.

Thus, softening of the 10-year yield is typically seen as bullish for risk assets, including Bitcoin (BTC). Trump plans to lower yields by controlling inflation, which is likely to bend well for BTC and reduce the budget deficit, which can be a headwind to risk assets.

“The energy component for them is one of the safest indicators of long -term inflation expectations,” Bessent said, repeating that increasing the energy supply will help lower inflation.

Other things that are similar, lower inflation would allow Federal Reserve (Fed) to continue to cut prices that are still very much in restrictive territory. It could add the bullish momentum to risk assets. Since September, Fed has lowered benchmark -lock costs by 100 basic points to 4.25% -4.5% range.

Meanwhile, Bessent’s strategy of injecting downward pressure on the 10-year dividend also involves determining the huge budget deficit through reduced fiscal expenses. Reduction of deficits would mean minor bond supply, higher bond prices and lower yields.

That said, the Biden administration’s suspected tax tax expenses for the increased bold rates and lubricated financial markets. So any cut in expenses could destabilize risk assets, including cryptocurrencies.

“Of course, getting the 10-year dividend on a downward path involves moving to improve the US fiscal position as well as inflation. So far we have had his partner, musk, cut federal government programs such as USAID, federal employees and such.

“Most of the US spending are on healthcare, social security and defense. Will Trump cause the pain that his focus seems to suggest? There’s a barely a politician out there who would,” Sheridan added.

Enjoy the move lower while it lasts

The 10-year dividend has fallen by 38 basic points to 4.42%, as markets prices in lower energy prices and non-inflation growth, according to Bessent.

However, analysts at Ing do not see a sustained fall.

“We also claim that there is no huge space for the downward for the 10 -year dividend. An effective floor is in place of just under 4%, which is determined from the Fund’s interest rate strip. That floor can of course change lower but would need a better ground than one is approaching 10 -year -old rate.

Ing added that it is difficult to see a large driver for a lower 10-year dividend, except for a potential enormous success of the Department of Government Efficiency or Dog, created to reduce wasting fiscal expenses and cut federal rules.