Asset prices are volatile, and long-term economic performance is the ultimate measuring stick. But recent days prove that markets have clearly embraced the Trump 2.0 economic vision. Markets are signaling expectations of higher growth, lower volatility and inflation, and a revitalized economy for all Americans.

Mr Trump’s election led to the biggest rise in the US dollar in more than two years and the third biggest in a decade. This is a vote of confidence in US leadership internationally and in the dollar as the world’s reserve currency. The Russell 2000, an index of small-cap stocks, also rose by the most in two years as investors expected the Trump economy would disproportionately benefit small businesses. An exchange-traded fund tracking the Russell 2000 index saw its largest single-day inflow in 17 years.

The rise in stocks was particularly unusual given that interest rates were also rising. The combination of a steepening yield curve, stable inflation expectations, and a rally in stocks suggests markets expect the Trump agenda to spur non-inflationary growth that will spur private investment. Despite a pro-growth agenda and resulting increased energy demand, the price of oil has fallen. Energy stocks also rose at the same time, pointing to expectations for greater energy production and geopolitical stability.

As markets await the revival of the American economy, the Biden administration’s mismanagement has created serious challenges for Mr. Trump to overcome. Economic growth has been fueled by an out-of-control federal budget deficit that reached 7% of gross domestic product last year. Mr. Trump has the authority to reprivatize the U.S. economy through deregulation and tax reform to spur the supply-side growth he achieved in his first term. This will be necessary to restart America’s growth engine, reduce inflationary pressures, and tackle the debt burden brought on by four years of reckless spending.

The US economy is also facing the consequences of the Biden administration’s skewed capital allocation. U.S. competitiveness has been weakened by destructive energy policies and the channeling of investments into a quixotic energy transition and semiconductor manufacturing facilities subject to government mandates that make them uneconomic. Mr. Trump will create a renaissance in American energy investment and bolster U.S. long-term competitiveness by ensuring trade is free and fair.

Leaving capital allocation to the private sector rather than the government is vital for growth. The United States should reform the Inflation Reduction Act’s distorted incentives that encourage inefficient investments that must be sustained through lifetime subsidies. Overhauling the regulatory and supervisory environment will encourage more lending and revitalize banks.

Mr. Trump should also address government borrowing. US interest expenses exceed the defense budget. Treasury Secretary Janet Yellen disrupted Treasury markets by borrowing more than $1 trillion in short-term debt that is more expensive compared to historical norms. Terminating this debt in favor of a more traditional borrowing profile could increase long-term interest rates and this will need to be handled skillfully. The only way to return to a prudent borrowing strategy without shaking the financial markets is to restore investors’ confidence in the economy and preserve the global role of the dollar.

The failure of Bidenomics is clear. But Mr. Trump has turned the economy around before and is ready to do it again. Twenty-three Nobel laureates may not understand it, but financial markets have spoken clearly.

Mr. Bessent is the founder, CEO and chief investment officer of Key Square Group.