Trump's Activist Treasury 2.0: A Risky Yield Curve Control Strategy

TL;DR;

The Trump-Bessent team is considering a strategy of yield curve control without explicitly stating it, involving starving the long end of Treasury supply, flooding the short end with T-bills, pressuring the Fed to cut rates, and publicly intimidating companies not to raise prices. This approach, dubbed Activist Treasury 2.0, lacks coordination and a credible inflation anchor, relying instead on coercion and political pressure. It echoes Nixon's 1971 policies, which led to stagflation, and poses risks such as market mispricing and vulnerability to shocks.