#特朗普税改 Is the news starting again? Let's analyze it simply. 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, making the situation escalate.

In short, with short-term debts maturing soon, the Federal Reserve has to either cut rates or expand its balance sheet; otherwise, the government will shut down. It happened once in 2020 when the government shut down, and the Federal Reserve later expanded its balance sheet to resolve the issue. However, this time the situation is different from last time. Last time it was due to the pandemic, and although expanding the balance sheet resolved some issues, it led to a double hit on both bonds and stocks. This time the situation is worse with the U.S.-China decoupling. Continuing to cut rates or expanding the balance sheet may further exacerbate the soaring CPI. Let's see how it plays out.