Author: Wall Street Watch
With the Trump administration’s large-scale tax cuts and spending bill officially implemented, the U.S. Treasury may soon unleash a “supply flood” of short-term government bonds to offset future fiscal deficits amounting to trillions of dollars.
The market has already begun to respond to the anticipated supply pressure. Concerns over an oversupply of short-term government bonds have been directly reflected in prices—the yield on one-month short-term government bonds has risen significantly since this Monday. This marks a complete shift in market focus from earlier concerns about the sell-off of 30-year long bonds to the front end of the yield curve.
Trillion-Dollar Deficit Looms: U.S. Short-Term Bond Market Faces “Supply Flood”
The implementation of the new bill brings with it a grim outlook for future fiscal conditions. According to estimates from the nonpartisan Congressional Budget Office (CBO), the…
