On Friday, U.S. Congress approved a $95Bn aid package to Ukraine and Israel, among other things, as if money came out of thin air (maybe it does). The package will be financed by Treasury bonds that Janet Yellen will need to issue over the course of the year. Those bonds will probably have a high yield, compared to existing ones, since J Powell is not able to lower rates due to recent inflation pick up. As you can see below, now the market only assigns credible odds to a rate cut in September, which incidentally, is getting too close to Election Day. This week, US GDP and PCE will be published, and they will confirm or deny the new trend. Is the economy growing enough to conclude rate cuts are not needed? And is inflation really a problem at 3.5ish% or is it what we need to repress our government debt?
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