Authored by Simon White, Bloomberg macro strategist,

Larger, growth-like stocks are set to outperform smaller, value firms as the yield curve faces flattening pressure from falling liquidity. That trend will be underwritten by policy if Treasury Secretary Scott Bessent’s desire for lower longer-term yields is realized.

As a former hedge-fund manager, the Treasury Secretary is probably more intimately familiar with the yield curve than most of his predecessors. But now rather than directly trading it, he is hoping to influence it. Bending the bond market to his will might prove tricky, but the ultimate winners are likely to be larger, higher-rated growth stocks, leaving those of smaller, value firms to lag further behind.