Carlyle: The roles of the Treasury and the Fed will become blurred

Odaily Planet Daily News Carlyle Group said that the Trump administration called for a sharp rate cut in the Federal Reserve, coupled with the prospect of increasing short-term bond issuance in the United States, could disrupt the Treasury bond market and ultimately push up long-term borrowing costs. "Bondholders want to believe that the Fed's responsibility is to maintain the real value of its principal. If they feel the Fed is more concerned about government financing, there may be bond sell-offs and a rise in maturity premiums." The core of the problem is that Trump continues to put pressure on Fed policymakers to lower benchmark interest rates to stimulate the U.S. economy - a move that will also open up channels for the Treasury to save interest expenses by shifting to issuing short-term Treasury bills rather than locking in long-term debt in the current high-yield environment. U.S. Treasury Secretary Bescent has proposed this idea in recent months. (Jin Shi)