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New York (Reuters) – Potential slowdown of the balance sheet of federal reserve balance sheet and secretary of Finance Minister Scott Bessnt against the immediate long -term debt cod could offer the bond market relief in the near future because fiscal fears persist.
Fed minutes since the meeting of the rate of 28.-29. January published this week showed that officials considered a possible break or slow down the decrease in the balance of the Fed, known as quantitative tightening (Qt) because the binding government debt could complicate the capacity of the central bank To complicate the central bank to measure market liquidity. Meanwhile, Bessnt in an interview with Bloomberg on Thursday on Thursday that the expansion of government debts is not on the table for the time being.
The revenues of the Ministry of Finance, which are indirectly moving at the prices, decreased on Wednesday Wednesday Wednesday, and Bessen's interview has been reached by another optimism that pushed lower revenues on Thursday.
However, his remarks did not represent the market expectations of increased government debt, because investors and analysts assume that the Ministry of Finance would eventually have to borrow more to compensate for the decrease in government income from the proposed tax cuts by President Donald Trump.
Brij Khurana, a portfolio manager with a fixed income in Wellington Management, said it was encouraging to have the Minister of Finance “who remembers financing costs”. Bessnt said at the beginning of this month it was focused on Trump's administration to detain ten -year revenues of the Treasury.
“At the same time, if the revenues are significantly lower, then they will probably make more tax cuts … If the returns fall much lower, I think Bessnt would try to push long -term dated bonds,” Khurana said.
Analysts in JPMorgan said that on Thursday on Thursday, the bonds of the debt bonds could retreat in the coming months in the coming months, given the focus of the administration on long -term revenues. However, they said they were still expecting the great government needs of loans in the next fiscal year to increase the sales of long -term debt.
Trump plans to restore and expand the tax cuts, which he signed in the law during his first presidency in 2017, which will expire at the end of this year. This could increase deficits by more than $ 4 trillion in the next 10 years, the Congress Budget Office estimated.
Federal cuts powered by federal expenditures powered by Elon Musk's (DOGE), along with potential income from the planned Trump tariff on imports, could help reduce deficit growth, although the extent of their impact is uncertain.
