- The potential change in US liquidity conditions may be more dictated by the US Treasury Department than the Federal Reserve in the upcoming days, as the Treasury is set to announce its financing needs and funding strategies.
- The Treasury is expected to re-balance its coupon issuance relative to T-bills in the upcoming QRA, as higher dependency on T-bills to finance its deficits would only postpone the deterioration in the US fiscal condition to the next couple of quarters.
- The Fed may need to react and accommodate continued fiscal expansion in the US while adhering to the limited room where the central bank could ease its policy.
