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

In essence, short-term debt is maturing soon, and the Federal Reserve will have to either cut interest rates or expand its balance sheet; otherwise, the government will shut down. It happened once in 2020, and the Federal Reserve similarly expanded its balance sheet to solve the problem. However, this time the situation is different from the last. Last time was a pandemic; although expanding the balance sheet solved the issue, it led to a double whammy in stocks and bonds. This time the situation is worse, compounded by the decoupling between China and the U.S. Continuing to cut rates or expand the balance sheet might exacerbate the soaring CPI. Let's see what happens.