In the second half of the year, there may be interest rate cuts,

I seem to have figured out a bit why the Federal Reserve has insisted on not lowering interest rates, even in the face of strong pressure from the Trump administration, it has not yielded. I think it's not just about inflation.

Recently, the yield on the 30-year U.S. Treasury bonds has surpassed 5%, which is easy to interpret. This means that if you do not raise interest rates for long-term debt of 30 years, no one will buy it. This also reflects a little that the outlook for the long-term stability of the dollar is not good.

The dollar may be in a long-term depreciation channel, so even the attractiveness of a 5% yield on U.S. Treasury bonds is weakening. For example, if the dollar inflates by 3% and depreciates by 3% in a year, and your yield on U.S. Treasury bonds is 5%, then your real yield is actually -1%. It means you are losing money by buying long-term U.S. Treasury bonds. Do you think there will be funds willing to bet on that?

Capital will definitely flow out of the U.S. because the capital that flowed into the U.S. initially valued the strength of the dollar and the yield of U.S. Treasury bonds. However, if the Federal Reserve continues to cut interest rates, capital will accelerate its outflow, and then no one will buy U.S. Treasury bonds, leading to a further rise in yields, creating a vicious cycle.

In the end, the Federal Reserve has to step in and use unlimited QE to absorb all U.S. Treasury bonds, and then inflation will explode. Once inflation explodes, it will be the Federal Reserve's fault, so no matter how the Federal Reserve chooses, it cannot control inflation. The current hesitation in not lowering interest rates is actually due to fear of a series of adverse reactions caused by U.S. Treasury bonds.