U.S. Treasury Secretary Scott Bosworth will testify before the House Financial Services Committee on Tuesday. The hearing is ostensibly focused on the international financial system and the supervision by the International Monetary Fund ( IMF ), but markets are more concerned with how he will respond to issues such as inflation, oil prices, interest rates, and federal debt.

The Iran conflict drives up energy prices

According to the testimony summary obtained from CNBC, Benedict is prepared to emphasize the resilience of the U.S. economy and to list the sanctions and economic pressure on Iran as one of the important achievements of this administration. With conflicts related to Iran once again driving up energy prices, oil prices have surpassed $100 per barrel, and the average price of gasoline in the United States is also significantly higher than it was a year ago.

This means that Democratic lawmakers are likely to focus on the rising cost of living. Rising energy prices are contributing to inflation and also increasing the financial burden on households for transportation and heating expenses.

• The average price of gasoline in the United States is reported at $4.32 per gallon.
• Up $1.14 from a year ago
• Diesel price reported at $6.23 per gallon.

The Fed's path may come under scrutiny

Bessent may also be questioned about the policy differences between the White House and the Federal Reserve. In August, the U.S. consumer price index rose by 3.4% year-on-year, increasing the market's bets for further interest rate hikes by the Federal Reserve. However, Trump advocates for interest rate cuts, which makes the outlook for interest rates even more sensitive.

Bessent has a close relationship with Federal Reserve Chairman Kevin Warsh and also meets with him regularly as per convention. Against the backdrop of rising inflation, lawmakers may press further to understand how the Treasury Department views the White House's public pressure on monetary policy and whether this will affect the market's assessment of policy independence.

Debt exceeds $40 trillion

Fiscal conditions will also be a focus of the hearing. The U.S. federal debt has exceeded $40 trillion, and with the boom in artificial intelligence investment and rising oil prices, the government's financing costs continue to be under pressure. The yield on 10-year U.S. Treasury bonds once reached 5% on Monday before falling back.

Although the rise in yields partly reflects investors' expectations of U.S. growth, it will also increase the borrowing costs for residents and businesses. It is expected that lawmakers may press the government to explain the discrepancy between its policy goal of "increasing affordability" and the re-emergence of 30-year fixed mortgage rates above 7%.

On the other hand, Besant and Republicans are expected to emphasize achievements in employment, wages, and tax cuts. The current unemployment rate in the United States is 4.1%, and Besant is prepared to point out in his testimony that the wage growth of low-income groups has been faster than that of high-income groups, with more than 64 million tax filings benefiting from the tax cut measures passed last year.