Is #特朗普税改 starting to spread news again? Let's analyze it briefly. Trump is eager for the Federal Reserve to lower interest rates to keep long-term U.S. Treasury yields below 4.5%. However, the Fed Chair completely ignores Trump. Trump is now continuing to cut taxes to fulfill his election promises while waiting for the government to run out of money and shut down, which will escalate the situation.

After all, short-term debts are about to mature. The Federal Reserve must either lower interest rates or expand its balance sheet; otherwise, the government will shut down. It happened once in 2020, and the Fed later expanded its balance sheet to resolve the issue. However, this time the situation is different from last time. Last time was a pandemic; although expanding the balance sheet resolved it, it led to a double hit on bonds and stocks. This time, the situation is worse with the added factor of decoupling between China and the U.S. Continuing to lower interest rates or expanding the balance sheet may further exacerbate soaring CPI. Let's see what happens.