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Now that the megabill has passed, expect a ton of short-term debt to be sold to finance the government’s deficit - MarketWatch

1. Trump's tax and spending bill could increase national deficit by $3.4 trillion. 2. Surge in Treasury bill supply may test investor demand and impact yields. 3. Short-term funding reliance poses risks of higher future financing costs. 4. Anticipation of more T-bills marks a shift for bond-market investors. 5. Demand for short-term debt remains strong amid government financing needs.

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FAQ

Why Bearish?

The imminent increase in T-bill supply often leads to dampened demand for 30-year bonds, typically raising yields. History shows that increased short-term supply has pressured longer-term instruments, exemplified in past cycles.

How important is it?

The article outlines crucial developments in U.S. fiscal policy that directly relate to debt issuance. The expansive T-bill measures signal changes likely to influence long-term rate expectations and investor behaviors.

Why Short Term?

The immediate issuance of T-bills and their effect on yields may unfold shortly, as investors react quickly. Historical trends indicate that tangible market shifts occur within weeks following key issuance announcements.

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