Is a $29 trillion Treasury bond chess game emerging? Trump's new policy aims to reshape the financial regulatory landscape, and the deeper implications behind the Federal Reserve and Wall Street's linkage deserve vigilance.

Do you think this is just a normal adjustment of bank regulation? That may underestimate the true ambition behind this 'capital new regulation'. As the U.S. government prepares to make major changes to bank capital requirements, the $29 trillion Treasury bond market is being reintroduced into the game board, and beneath this appearance of 'regulatory reduction', a fundamental reshuffling of the financial landscape may be brewing.

According to the latest revelations from the Financial Times, U.S. regulators are brewing the largest adjustment to bank capital rules in over a decade. One of the core actions is the supplementary leverage ratio (SLR) reform plan that will be proposed before summer this year. It seems to be a technical adjustment of capital regulation, but in fact, it is a further acceleration of the Trump administration’s agenda to relax financial regulations, more importantly, it points directly to the $29 trillion U.S. Treasury bond market.

1. What is SLR? Why is it so critical?

SLR (Supplementary Leverage Ratio) is a bank capital regulatory standard introduced by the Federal Reserve after the 2008 financial crisis, requiring large banks to hold a certain proportion of high-quality capital (such as common equity and retained earnings) to cover all assets, including on-balance-sheet assets and off-balance-sheet risk exposures.

Currently, the eight major banks in the U.S. are required to maintain an SLR level of at least 5%. The intention of this rule is to prevent systemic risks from re-emerging in the banking system — but problems also arise: holding low-risk assets such as U.S. Treasury bonds will also be counted toward the leverage ratio, thus reducing banks' operational space in the Treasury bond market.

In other words, this system inadvertently 'punishes' banks for buying Treasury bonds.

2. Why relax the SLR at this moment? There are three hidden goals behind it

1. Support the Treasury bond market and reduce financing costs

Under the total amount of $29 trillion in Treasury bonds, the U.S. government will continue to expand its deficit in the future. The Trump administration attempts to weaken the SLR rules to free up more balance sheet space for banks to take on Treasury bonds — thus reducing overall financing costs. This is an indirect method of controlling interest rates and enhancing debt stability.

2. Regain market initiative and counter non-bank financial institutions

In the past decade, regulatory tightening has forced banks to yield their roles in Treasury bond trading to high-frequency traders and hedge funds. If the SLR is adjusted, it will allow traditional banks to return to the trading stage, thus reshaping the power landscape of the U.S. financial market.

3. Align with international standards and reduce regulatory burdens

Currently, the SLR standards for U.S. banks are much higher than those of their counterparts in Europe, Japan, and Canada. Easing regulations will help enhance the international competitiveness of U.S. banks and further promote the concentration of global capital in the U.S. financial system.

3. The financial layout of '29 trillion U.S. Treasuries' may become a key part of Trump's financial strategy

The key point is that the Trump administration not only wants to lighten the burden but is also paving the way for Wall Street by relaxing the SLR, intending to guide large banks to increase their positions in Treasury bonds while releasing more credit and market liquidity. Achieving policy goals through internal operations of the financial system is not a simple 'easing', but a structural reshuffle.

And this is exactly where the Mlion.ai platform can play an important role: through AI models, investors can:

• Real-time tracking of the impact of regulatory policy changes on the bond market, stock market, and cryptocurrency market;

  
  

• Analyzing the dynamic transformation of SLR adjustments on U.S. dollar liquidity, Treasury bond yields, and risk preference models;

  
  

• Warning of the cross-asset risk transmission paths brought about by financial regulatory 'easing', helping users to layout or avoid risks in advance;

Current policy-level interconnectivity is very strong; Mlion.ai can not only help investors understand the surface but also reveal the underlying logical chain.

4. Market opinions are clearly divided: Is regulatory easing an opportunity or a hidden danger?

The logic of supporters is very clear:

Reducing the SLR can free up $2 trillion in asset space for banks, enhancing their ability to provide liquidity during crises.

For example, large lobbying organizations such as the Financial Services Forum and the Bank Policy Institute have stated that the current system severely restricts banks' flexibility to respond to market pressures and should be adjusted as soon as possible.

However, there are also significant opposing voices:

Think tanks like the Peterson Institute for International Economics believe that in the current context of high global economic and political uncertainty, this decision carries extremely high risks and may even lay the groundwork for the next round of systemic risks.

In particular, once capital requirements for banks are generally lowered, a large-scale credit expansion is likely to occur again, and whether this will lead to the final madness of asset prices or even trigger a future crisis is something no one is willing to guarantee.

5. Conclusion: Regulatory easing may reconstruct the asset pricing system, and investors need to be vigilant

Relaxing the SLR is merely a facade; behind it lies a deep reshaping of global capital flows and risk preferences. The U.S. Treasury bond market may become the main battleground for policy regulation and capital games in the next two years, and banks will no longer just be 'intermediaries' but 'strategic carriers'.

For investors, it is necessary to reassess all traditional logic based on liquidity, risk pricing, and policy signals.

Using intelligent investment research platforms like Mlion.ai can help maintain judgment and foresight more effectively in an era where regulatory signals are chaotic and policy rhythms are unpredictable.

Disclaimer: The above content is for information sharing only and does not constitute any investment advice. The market has risks; entering the market requires caution.