Treasuries Dismiss President's Promise: 3-Minutes MLIV

• Former President Trump's proposal for a $5,000 payment to adult citizens is viewed as a $1.2 trillion pro-cyclical fiscal policy, but markets currently assign it 'almost zero credibility'.
• The US fiscal deficit is a long-term concern, expected to drive Treasury yields higher over the next year, regardless of the specific proposal.
• Upcoming US PPI and CPI reports are 'fairly priced', with the Fed likely seeking any disinflationary signs to avoid further rate hikes next week.
• France is highlighted as a significant debt concern due to rising debt-to-GDP (117%) and anticipated increased fiscal spending from political parties, leading to a steepening of long-end yields.

The discussion analyzes the potential impact of former President Trump's proposed $5,000 payment on US Treasury markets, upcoming US inflation data (PPI/CPI) and the Federal Reserve's rate decision, and escalating debt concerns in Europe, particularly France. While markets are largely dismissing Trump's proposal, underlying fiscal deficits in both the US and Europe are expected to exert long-term upward pressure on bond yields.