After four years of the Biden administration pushing the limits of Modern Monetary Theory with Build Back Better, the Green New Deal, and Activist Treasury Issuance, the Trump administration and Congressional Republicans said “hold my beer” this week with the passage of Trump’s own jumbo-sized, triple-B spending plan, the Big Beautiful Bill. Precisely what the new budget will do to federal deficits over the next few years is anyone’s guess, but whatever your estimate is, we’ll take the over. President Trump had a simple consolation for those stodgy fiscal conservative dinosaurs hand-wringing about what the bill might do to the US’s already bloated federal debt, noting that we’ll make it all back with “GROWTH, more than ever before,” echoing Treasury Secretary Scott Bessent’s talk track in recent weeks. The Treasury Secretary’s messaging shift has apparently also bled into his views on the federal maturity ladder, as Bessent, who just last year criticized Janet Yellen’s aggressive shift of debt issuance to the short end of the yield curve as an attempt to drive a “sugar high” in the economy, flatly said this week that he has no intentions to term out Treasuries beyond the short-end anytime soon. As Trump continues to publicly attack Fed Chairman Jerome Powell’s decision to maintain benchmark interest rates and the administration teases the announcement of a more, ahem, accommodative Fed Chair, it increasingly looks like the plan is to pretty explicitly and transparently pin yields and let nominal growth rip. Historically, such an environment has been very kind to hard assets without sovereign liability – it might make sense to get some just in case Trump does exactly what he’s telling you he’s going to do.

https://www.ten31timestamp.com/p/ten31-timestamp-904148