Citrini: “United States Treasury - Federal Reserve Agreement” or creating conditions for a 30-year rise in United States debt

On 28 August, Citrini Research indicated that, with increased collaboration between the United States Treasury and the Federal Reserve, it might be possible to push the Government to move more towards short-term debt financing and reduce the supply of long-term United States Treasury debt, thus creating conditions for a 30-year rise in United States debt. According to this research institute, changes in United States bank regulation, Treasury debt management and the Fed's balance sheet policy are coming together, a framework that could be called the new Treasury-Federal Reserve Agreement. Under this framework, the Federal Reserve will reduce the balance sheet, while commercial banks will expand their balance sheets. As the Government reduces the issuance of long-term bonds and shifts to more treasury bills, banks will absorb more short-term national debt. Citrini stated that a reduction in the supply of long-term national debt could help to reduce long-term rates of return. The Agency recommended that the client bet on 30-year United States debt to win five-year national debt, i.e. the difference between the two would narrow。