#特朗普税改 has started to release news again, right? 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. Trump is now continuing to cut taxes to fulfill his election promises, while waiting for the government to run out of money and shut down, which will escalate the situation.

In the short term, debt is about to mature, 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 also expanded its balance sheet to solve the problem. However, this time the situation is different from last time. Last time was due to the pandemic, and although expanding the balance sheet resolved it, there was a dual hit to both bonds and stocks. This time the situation is worse, compounded by the decoupling between China and the U.S., and continuing to cut interest rates or expand the balance sheet may further exacerbate soaring CPI. Have fun.