Is #特朗普税改 starting to release news again? Let’s do a simple analysis. Trump is eager for the Federal Reserve to cut interest rates to keep long-term U.S. Treasury yields below 4.5%. However, the Federal Reserve Chairman is completely ignoring Trump. Trump is now continuing to cut taxes to fulfill election promises, passively waiting for the government to run out of money and shut down, which will continue to escalate the situation.

In short, short-term debts are maturing soon, and the Federal Reserve will either cut interest rates or expand their balance sheet; otherwise, the government will shut down. It happened once in 2020, and the Federal Reserve later also expanded their balance sheet to solve the problem. However, this time the situation is different from the last time. Last time it was due to the pandemic; although expanding the balance sheet solved the issue, it resulted in both debt and stock market declines. This time the situation is worse, compounded by the decoupling between China and the U.S. Continuing to cut interest rates or expanding the balance sheet may further exacerbate the soaring CPI. Let’s see what happens.