What did Besent reveal in his latest speech at the G20? After discussing Besant's shift in Japan's monetary policy this morning, let's talk about Besant's speech at the G20 Finance Ministers and Central Bank Governors Meeting, which contains a lot of information. On the surface, he talked about global debt, Japanese monetary policy, China's trade imbalance, Iran sanctions, AI productivity, and also responded to US bond yields, oil prices, and Federal Reserve policies. The topic is scattered, but when viewed together, the policy logic behind it is actually very clear. Besent is trying to establish a new macro narrative for the market: 1) The United States can tolerate a period of high interest rates and also accept a global repricing of the cost of capital; 2) The Ministry of Finance will maintain market liquidity, but will not promise to push long-term bond yields back to a certain level; 3) Solving the debt problem requires growth, productivity, and fiscal constraints; 4) Japan needs to accelerate currency normalization; 5) China needs to adjust its growth model that relies on exports; 6) Iran will return to the negotiating table under financial and energy pressures. If this policy is successfully implemented, the ultimate result may be a decline in oil prices, appreciation of the yen, easing of inflationary pressures, and gradual stabilization of US bond yields. The problem is that the market is currently going through Japan's interest rate hike, Iran's escalating sanctions, high oil price fluctuations, and global bond repricing. The final outcome may be favorable, but the process may not be easy. Let's talk about the most important points for the market: 1. Bessent begins to admit that the US Treasury Department cannot control the 'equilibrium interest rate' Beisen has a key statement regarding the positioning of the US bond market: he said that the Treasury Department does not have the ability to change the natural equilibrium price of the bond market, and what it can do is to alleviate the one-sided, disorderly, and market conditions caused by erroneous narratives. This sentence basically clarifies the boundary of the Ministry of Finance's intervention in the US bond market: "The Ministry of Finance can handle liquidity issues, catch some sell offs when market functions fail, adjust bond issuance structure, repurchase old bonds, and improve trading depth. As for where 10-year and 30-year US bonds should be traded, it is ultimately determined by inflation, fiscal supply, economic growth, and global capital demand So, repurchase is closer to a market function tool and cannot be simply understood as monetary easing. This means that if oil prices continue to rise, fiscal deficits do not improve, and AI infrastructure financing continues to compete for long-term capital, there will still be upward pressure on 10-year and 30-year yields. The Ministry of Finance is highly likely to avoid a liquidity stampede in the market, but will not continue to fight against interest rate fundamentals in order to protect stock valuations. What Besent really cares about is whether the market is out of order, not necessarily whether the yield has increased by several tens of basis points. This is crucial for overvalued technology stocks. In the past, the market used to understand the Ministry of Finance's repurchase, regulatory adjustments, and Besant's public statements as some kind of "long-term debt support". Now it seems that this understanding requires further revision. The liquidity protection of US Treasury bonds does not necessarily mean price protection. 2. Growth bonds have become the core narrative of US fiscal policy Bessent continued to emphasize that the United States relies on economic growth and productivity improvement to solve its debt problem. This statement itself is not a problem: whether the debt ratio can remain stable depends on nominal economic growth rate, government financing costs, and underlying fiscal deficits. If economic growth is consistently higher than the cost of debt, and the government is able to control new deficits, the debt to GDP ratio naturally has a chance to stabilize. Previously, here was https://(x.com)/qinbafrank/status/2092655852906029475? S=46&t=k6rimWs Ebo2D2TXolYcM-A has also been discussed Besent is currently betting on several directions: Relax regulation, increase energy supply, promote private sector investment, use AI to improve productivity, and then gradually promote fiscal consolidation. The most critical variable here is whether fiscal consolidation can be implemented. It is difficult to solve the current debt problem in the United States solely through growth. The size of the US fiscal deficit is already significant, and interest expenses are rapidly increasing. Even if AI brings productivity improvements, as long as government spending continues to grow at a high rate, the fiscal space created by growth may still be consumed by new deficits. Therefore, what the market needs to pay attention to next is the fiscal plan that Besant and the White House budget team are preparing to announce. 1) If the plan has clear expenditure constraints, deficit targets, and timelines, the risk premium of US Treasury bonds may decrease; 2) If the final statement is still biased towards the long term and principles, the bond market will not change its pricing just because of the words' growth bonds'. 3. His attitude towards AI reveals that the United States is preparing to incorporate AI into its macro policy framework Bessen's discussion on AI this time is also of great significance. He acknowledges that AI construction requires a significant amount of capital, but believes that AI capital expenditure will drive productivity prosperity and have an anti inflationary effect in the future. This represents the beginning of US fiscal policy elevating AI from a technology industry issue to the level of macro growth and debt sustainability. The United States needs AI investment to continue expanding. The reason is very practical: in a high debt environment, it is difficult for the United States to sustain growth through long-term fiscal stimulus. The population structure also limits the supply of labor. If we want to maintain relatively high economic growth while controlling wage and service inflation, productivity must be improved. AI has just been placed in this position. The problem is that there is a significant time lag in the macro effects of AI. Last week at an event on Futu, https://(x.com)/qinbank/status/2094037256558493896? S=46&t=k6rimWSEbo2D2TXolYcM-A has also shared its understanding of the four time differences. What the market can currently see are still AI financing, power bottlenecks, and long-term interest rate pressures. There have been some micro cases of productivity dividends, but there is still a long way to go before they can be fully reflected in macro data. This also explains why AI fundamentals are strong, but AI stocks are still highly sensitive to long bond fluctuations of several tens of basis points. Profit growth and valuation discount rate are working simultaneously. 4. Iran sanctions and oil prices are the biggest short-term risks in the entire policy package Besent believes that through bank sanctions, US dollar clearing restrictions, and shipping pressure, Iran can be forced back to the negotiating table and ultimately restore normal shipping in the Strait of Hormuz. His final judgment is optimistic. But the market is currently trading in the process of policy promotion. The United States plans to continue increasing banking and financial sanctions, and Iran may also retaliate through shipping, regional agents, or energy facilities. Any misjudgment could potentially push up expectations for crude oil and inflation again. The stronger the short-term sanctions, the greater the supply risk. If negotiations land in the mid-term, there will be room for a rapid decline in oil prices. This is also one of the most important macro variables for US stocks and US bonds in the coming weeks. This article is sponsored by @ bitget_zh and titled 'Bitget Buying US Stocks: Instant Entry, Smooth Trading'