By a daring beard
NEW YORK (Reuters) – A potential delay in the balance sheet of the Federal Reserve drawing and the Minister of Finance Scott Bessent against threatening long -term debt increases could offer exemption in the short term to increase jitters in the bond market while fiscal concerns are left.
Driven minutes of the interest meeting of January 28-29, released this week, showed that civil servants weighed a possible break or delay in the Fed balance reduction, known as quantitative tightening (QT), because a binding government debt hairstyle has the capacity of the power station Bank was able to make it difficult to gauge the market liquidity. In the meantime, Bessent said in an interview with Bloomberg Television on Thursday that the expansion of the long -term issue of the government debt is not on the table for the time being.
Treasury proceeds, which go to the prices are reversed, fell after the FED minutes on Wednesday and the interview of Bessent injected further optimism that pushed the yields lower on Thursday.
Nevertheless, his comments did not disturb the market expectations of increased government debt, because investors and analysts expect that the treasury will eventually have to borrow more to compensate for a decrease in the government revenue of the proposed tax cuts of President Donald Trump.
Brij Khurana, a portfolio manager with fixed -income income in Wellington Management, said it was encouraging to have a minister of finance “who is aware of the financing costs.” Earlier this month, Bessent said that the focus of the Trump administration would contain the benchmark 10-year-old Treasury yields.
“At the same time, if the yields are equipment lower, they will probably do more tax cuts … If the yields go a lot lower, I think berry would try to push for longer bonds,” said Khurana.
In a memorandum on Thursday, analysts at JPMorgan said the concern of the bond market on excessive debt supply in the background in the coming months, given the focus of the administration on long -term yields. But they said they still expected that large government loans in the next tax year will lead to increases in long -term debt sale.
Trump is planning to extend and expand tax cuts that he signed in the law during his first presidency in 2017, which will end at the end of this year. This could increase the deficits in the next 10 years by more than $ 4 trillion, the Congressional Budget Office has estimated.
Federal spending cuts driven by the Ministry of Government Efficiency of Elon Musk (Doge), together with potential income from Trump’s planned rates, can help to curb the shortage of shortage, although the size of their impact is uncertain.
