Has #TrumpTaxCuts started to release news again? Let's analyze it briefly. 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 completely ignores Trump. Currently, Trump continues to cut taxes to fulfill his election promises, and is passively waiting for the government to run out of money and shut down, making the situation escalate.

In short, short-term debts are maturing soon, and the Federal Reserve must either cut interest rates or expand its balance sheet; otherwise, the government will shut down. It happened once in 2020, and the Federal Reserve later expanded its balance sheet to solve the problem. However, this time the situation is different from the last. The previous incident was due to the pandemic, which although resolved by expanding the balance sheet, resulted in a double hit on bonds and stocks. This time the situation is worse due to the decoupling between China and the U.S. Continuing to cut interest rates or expand the balance sheet may further exacerbate the soaring CPI. Let's see how it goes.