Foreign countries are "de-dollarizing", selling their T-bills. Banks don't want them, they've been going bankrupt because they bought 10-years at 1% when 1-months give 5%. They have deposit flight and need to sell T-bills; not buy new ones at 3.6%. So how does Yellen sell them then?
One way is to raise rates, to lure buyers away from the 5% money market crowd. And a $T more at 5%, 6%, 7%, has huge impacts on stonks, and on bagholder banks and foreign countries with 1% Treasuries. There's unknowns and other players (Fed), but I believe the ugly hyper inflation summer starts here.
Once this is signed, Yellen needs to not only pay for what's in this bill, but also roll back the "extraordinary measures" running since January. That means she needs a $Trillion, and immediately. Here's a story from a week ago that says it will drain liquidity from markets within a few weeks of signing, and end up raising interest rates. https://markets.businessinsider.com/news/bonds/treasury-general-account-tbills-liquidity-debt-limit-ceiling-us-default-2023-5
Foreign countries are "de-dollarizing", selling their T-bills. Banks don't want them, they've been going bankrupt because they bought 10-years at 1% when 1-months give 5%. They have deposit flight and need to sell T-bills; not buy new ones at 3.6%. So how does Yellen sell them then?
One way is to raise rates, to lure buyers away from the 5% money market crowd. And a $T more at 5%, 6%, 7%, has huge impacts on stonks, and on bagholder banks and foreign countries with 1% Treasuries. There's unknowns and other players (Fed), but I believe the ugly hyper inflation summer starts here.