The United States reached a new debt ceiling around January 21, and since then, the government has been unable to issue new debt. U.S. Treasury yields began to decline around January 10, dropping from a high of 4.8% to 4.25%.

From another perspective, since the debt ceiling on January 21, the TGA has decreased from 704 billion to 383 billion (160 billion per month). At this rate, there are about 70 days left to spend it all (by the end of May). Therefore, the debt ceiling must be resolved before the end of May, or there will be a government shutdown.

So, will the government continue to issue debt in May, and can interest rates remain around 4%?

On the other hand, the Federal Reserve is still in QT, currently holding 5 billion per month in Treasury bonds and 35 billion per month in MBS. I estimate that the next FOMC meeting will also cancel the 5 billion per month in Treasury bond QT.

Will there be QE? The Fed is still constrained by inflation.

If you were Trump, what would you do?

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