Scott Bessent's Advisor Defends Real Yield Spike, Showcasing 'Trending Lower' Inflation Measures Since Biden's Presidency
David Zervos, counselor to U.S. Treasury Secretary Scott Bessent, published market data showing four key core inflation measures have been “trending LOWER” since the 2024 election, attributing the rise in 10-year Treasury yields to real economic expansion rather than inflation expectations.
Treasury Data on Inflation and Breakevens
One of the charts posted by Zervos tracks Core CPI, Cleveland trimmed-mean CPI, Atlanta sticky core CPI, and Dallas trimmed-mean PCE from January 2017 through August 2026.
A second chart based on U.S. Treasury yield curves from Nov. 5, 2024, to Oct. 6, 2026, indicates that 10-year breakevens traded within a 33-basis-point band between 2.17% and 2.50%, ending at 2.36%.
Zervos highlighted that “long-term inflation expectations have been remarkably STABLE,” while 10-year TIPS real yields drove the borrowing cost increase across a 128-basis-point range, reaching 2.91%.
Critics Challenge ‘Useless’ Inflation Metrics
However, Zervos’s reliance on modified inflation data has drawn sharp pushback from financial experts. Macro investor Otavio Costa slammed the St. Louis Fed’s promotion of trimmed-mean PCE, calling it a “useless” metric, back in May.
Because the measurement calculates inflation by systematically stripping out the most extreme price changes each month— which often include volatile but essential consumer goods and broad commodity spikes — critics argue it masks surging living costs to artificially justify central bank policy decisions.
Bessent Links Yields to Economic Growth
Zervos published the charts to support comments made by Bessent on Oct. 8, during an Oval Office gathering with President Donald Trump, Senator Ted Cruz, and Michael Dell and Susan Dell regarding child investment accounts.
Addressing rising borrowing costs and mortgage rates tied to the 10-year yield, Bessent termed the rise a “global phenomenon” and characterized the domestic market movement as a “real rate issue.”
“Growth here is strong,” Bessent said, noting that elevated headline readings stem from an “energy shock” while core inflation moves toward central bank goals. Bessent projected that following the conflict, “mortgage rates and the tenure will come back down.”
White House Projections on Energy Prices
President Trump reinforced Bessent’s outlook by predicting a reduction in energy costs once military operations end.
“Oil will drop like a rock as soon as we’re finished with the war, which will be very soon. It’s going to be very soon. One way or the other we’ll be finished with it. But oil will come down to levels that were, I think, maybe even lower than they were before the war,” said President Donald Trump.
How Have the Stock Markets and Oil Performed?
At the last check, Brent Oil Futures for December 2026 rose over 4.39% to $104.60 per barrel. Similarly, Crude Oil WTI Futures for November 2026 climbed to $92.21, a gain of 4.45%.
The S&P 500 index has advanced 13.75% year-to-date. Similarly, the Nasdaq Composite index was up 18.52%, and the Dow Jones gained 5.78% YTD.
On Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. SPY fell 0.24% to $777.22, while QQQ declined 0.25% to $757.73. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 0.69% lower at $511.02.
In premarket trading on Thursday, SPY was down 0.43%, QQQ declined 0.68%, and DIA fell 0.68%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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