Leading macro strategist, Craig Shapiro, is warning that President Donald Trump’s proposal to lean more in favor of short-term Treasury bills could have major ramifications for the U.S. Dollar.
What Happened: On Sunday, in a post on X, Shapiro warned against Trump’s intention to avoid issuing 10-year treasury notes that currently trade at high interest rates, opting instead for shorter-term Treasury bills with substantially lower interest rates.
The post is referring to Trump’s interview with Fox News’ “Sunday Morning Futures,” where he said, “I don't want to have to pay for 10-year debt at a higher rate,” when talking about the $9 trillion in US debt that is set to mature this year.
Shapiro highlighted the implications of such a shift, warning that leaning towards short-term debt issuance could destabilize the long-term U.S. fiscal outlook.
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“If this bills-over-bonds issuance dynamic really happens, you can kiss the $ goodbye,” he says, bringing attention to the kind of impact this is set to have on the U.S. Dollar.
Shapiro then asks his followers if they’ve got gold and Bitcoin in store for such an eventuality, highlighting the broader flight-to-safety sentiments among investors, alongside the hedging potential of these assets at the time of currency debasement.
Why It Matters: Early this year, before the Trump administration came to power, Charles Gasparino, a New York Post columnist, had criticized former Treasury Secretary Janet Yellen for the same approach.
Gasparino warned that Yellen’s preference for rolling over short-term bonds instead of issuing long-term debt had “masked the severity” of the federal deficit problem, while setting up a potential crisis for the incoming administration.
“You can’t do that forever,” he said, noting that “traders will demand much higher rates to issue long-term debt, which will blow out interest rates on credit cards, mortgages, etc,” which he says could result in a recession, or worse, in a post on X.
Price Action: U.S. 10-Year Treasuries trade at 4.253%, the 30-Year at 4.81%, while the 2-Year note offers a yield of 3.27%, at the time of writing this.
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