“大漂亮法案”过了，美债发行潮也要来了

Core Viewpoint - The article discusses the impending surge in the supply of short-term U.S. Treasury bonds due to significant fiscal deficits resulting from the recent tax and spending legislation, which is projected to increase the national deficit by up to $3.4 trillion from fiscal years 2025 to 2034 [2][3]. Group 1: Supply and Demand Dynamics - The U.S. Treasury is expected to issue a large volume of short-term debt to manage the financing needs, as the current yield on one-year and shorter-term bonds has risen above 4%, which is still lower than the nearly 4.35% yield on ten-year bonds, making short-term debt a cost-effective option [3][4]. - The market is currently experiencing a shift in focus from concerns about long-term bond sell-offs to the potential oversupply of short-term bonds, with predictions that the proportion of short-term debt could rise from 20% to 25% of total outstanding debt [5][6]. - There is a significant demand for front-end debt, supported by approximately $7 trillion in money market funds, which is expected to absorb the increased supply of short-term Treasury bonds [5][6]. Group 2: Market Sentiment and Future Outlook - Some market participants express optimism that the next financial crisis will not stem from short-term bonds, citing the substantial liquidity in the market and the attractive real yields available [7][8]. - The Federal Reserve is anticipated to intervene if any supply-demand imbalances arise, providing support to stabilize the market [8].