The US governor must run 🥐 $ 9 at the end of 2026 (a large part of it was short and in the medium term – 2, 3 and 5 -year treasure bills with a heavy part of the 10 -year bonds issued in 2016 also).
The problem: yields have skyrocketed (10 -year -old treasury bills to 4.2% are the triple of what the government paid when it has horrible 8n 2020 to 1.3%). $ 9 to 4% vs 1% adds $ 270 billion + / year. The Fed knows that at this%, if it borrows massively, it barely has room to keep the lights on.
Meanwhile, the total national debt is $ 34 tp due to tax discounts (2017), the cocovio recovery ($ 5T +), military expenses and increasing interest payments. It is the monster 💀 that they want to prevent exploding.
The objective: refinancing to lower yields before the debt bomb is triggered, the lower demand for capital, triggers a slight recession (just enough to shave 50-100 yield base points), control the long end of the curve (10Y) – the real reference for budgetary stability – the # # Empire together)
How: Prices (destruction of demand, slow and capex), economic nationalism (uncertainty about global trade, immigration, energy policy chaos + manipulation of money) = slower growth, suppressing inflation expectations, reducing the volatility of the bond market, derivative yields.
At the head of a superpower of the debt (that is to say all modern superpower), your first duty is to protect your ability to refinance.
This is exactly what the United States has done:
- 11-13: receiver + qe
- 20-21: Refi at 0% then blast stimulus
- 24-26: Slow economy -> REFI -> Re -stimulating
When will the valves open? Once:
- The majority of 9 t $ is refined (end planned T1 2027).
- The 10 -year yield is back at less than 3.25% (ideally less than 2.5%)
- Inflation is stable around 2 to 2.5%
- The Fed has room to bring accommodation (qe, lower prices) = we might not see the real monetary relaxation before the end of 26 / at the start of 27, unless there is a serious financial crisis earlier.
Capital report and technician / drain: the Fed reduces its assessment via QT (quantitative tightening – rental assets {La Fed holds us the treasury bills and Mb} without reinvesting), waiting:
- Risk assets (tech and crypto) are intentionally devalued.
- The Silicon Valley was a liquidity engine: hunting with pandemic money, a hobby capital, hired aggressively and led asset bubbles.
- By tightening politics, the Fed is bleeding the speculative excess of these sectors to reintegrate inflation and capital flows into safer assets (treasury vouchers), technology and crypto are hyper sensitive to liquidity:
- Assessed on future profits (higher prices -> future reduced future profits -> assessments drop). When the rates increase, the QE stops, Fed sells / loyal the active ingredients = fewer liquidity -> VCS pull -> Startups die -> The crypto cools.
Why is the 10-year return reference for budgetary stability (the most important link in the world)?
- anchor for the long -term loan costs of the government
- mortgage, business debt, student loans, all yield keys 10Y
- reflects the expectations of inflation and real growth
- If it remains low, investors think that the United States is stable. * The FED deficit of the United States is $ 2T / year, the interest on the debt has crossed $ 1.1T / year – more than half of the new loans are simply going to pay interest === Officer control = national survival strategy 🗾
