Recently, US Treasuries have continued to decline.

In the view of Zhao Wei, the chief economist of Shenwan Hongyuan Securities, this does not stem from a single fiscal risk. Long-term US Treasury bond yields were mainly driven by inflation before May 16, and by fiscal factors after May 16.

“Old wounds have not healed”, and the US deficit problem has raised the alarm. Zhao Wei cautioned that the supply pressure on US Treasuries might rise this year. In addition, the current balance of the US Treasury’s General Account (TGA) remains abundant. However, if an agreement is not reached in time to raise the ceiling, US Treasuries may be affected again.