Carlyle: The roles of the U.S. Treasury and the Federal Reserve will become blurred

Jinse Finance reported that the Carlyle Group stated that the Trump administration's call for the Federal Reserve to sharply cut interest rates, combined with the prospect of increased issuance of short-term U.S. bonds, could disrupt the Treasury market and ultimately push up long-term borrowing costs. Jason Thomas, Global Head of Research and Investment Strategy at the Carlyle Group, said: "Bondholders want to believe that the Fed's responsibility is to preserve the real value of their principal. If they instead feel that the Fed is more focused on government financing, there may be bond sell-offs and a rise in term premiums." The core issue is that Trump continues to pressure Fed policymakers to lower benchmark interest rates to stimulate the U.S. economy—a move that would also open the door for the Treasury to save on interest expenses by shifting to issuing short-term Treasury bills rather than locking in long-term debt at current high yields. U.S. Treasury Secretary Bessent has proposed this idea in recent months.