⚠️ The U.S. Treasury has entered the interest rate hostage zone— Interest payments now account for about 14% of federal spending, yet the current Treasury yield is only 3.7%. What if it goes back to the 6% levels of the 90s? The fiscal situation might just implode. This is the so-called Fiscal Dominance: monetary policy is no longer independent and has to revolve around fiscal sustainability. The next incoming chair, Hassett, advocates for rapid rate cuts, and the bond market players on Wall Street are freaking out. Because in bond market logic, rapid rate cuts only mean one thing—fiscal pressure is unbearable, and the Fed is ready to throw in the towel. Once this expectation takes hold, long-term rates will rise as people demand higher yields to compensate for potential future inflation, money printing, and policy uncertainty. We might witness this particularly surreal scenario: Short-term rates go down, Long-term rates are pushed up by the market, Fiscal pressure not only doesn’t ease but gets even worse. We could be looking at several years of chaotic markets!