#美联储重启降息步伐 Have you noticed something really bizarre?

Right now, interest payments alone consume 14% of the US federal budget each year, even though Treasury yields are only at 3.7%. If market sentiment shifts one day and yields spike back to the 6% levels of the 1990s, the books would probably be torn up on the spot.

To put it bluntly, this is the classic opening of “Fiscal Dominance”—monetary policy completely loses its independence and is forced to revolve around plugging fiscal holes.

Here’s the issue: the newly appointed Fed Chair Hassett advocates for aggressive rate cuts, and the bond traders on Wall Street are seriously panicking. Why? Because under the rules of the bond market, rapid rate cuts only mean one thing—the government can’t hold up fiscally, and the central bank is preparing to compromise.

Once this expectation spreads through the market, long-term rates may actually be pushed up by capital flows, as investors demand higher risk premiums to hedge against potential future runaway inflation, excessive money printing, and policy swings.

The most absurd scenario could be: short-term rates come down, long-term rates are driven up by the market, and fiscal pressure not only fails to ease, but actually enters a vicious cycle. In the next few years, the market might enter a rather chaotic adjustment period.