Treasury is flooding the market with bills and stocks get the free QE ride

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THE US GOVERNMENT IS RUNNING QE WITHOUT CALLING IT QE

The US deficit is projected at $1.9 trillion this year, or 5.8% of GDP.

More than half of it is now being funded with short-term Treasury bills instead of long-term bonds.

By July 2026, the Treasury had issued $413 billion in net new bills, already 15% more than in all of 2025.

Why this matters.

Long-term bonds carry more risk. The 30-year is at 5.23%, its highest since 2007, so investors demand a lot to hold them.

Bills mature quickly, carry far less interest rate risk, and can be used as collateral.

By funding with bills instead of bonds, the Treasury reduces the amount of long-term debt the market has to absorb.

That frees up money for other assets.

The effect looks similar to QE, without the Fed doing anything.

Bloomberg strategist Simon White found four previous periods with this same setup.

S&P 500 returns during them were almost double the historical average.

The sample is small, and rising inflation or war risk could cancel the effect entirely.

But Washington has changed how it borrows, and the change favours stocks.



Spot on 👇

Sec Bessent is saying what most of Wall Street already knows but won’t admit: the era of Fed whisperers masquerading as analysts has hollowed out real market thinking.

For years, asset prices weren’t driven by fundamentals, they were driven by interpretation of carefully leaked signals, trial balloons, and selective “guidance” fed to a handful of well-connected reporters. That isn’t price discovery; it’s narrative management.

When journalists become conduits for policy hints instead of interrogators of policy outcomes, markets stop analyzing and start front-running. Wall St stopped doing objective research, and relied on the Fed to spoon feed them. Wall St thus, never questioned the Keynesian dogma. Wall St became a lapdog for the Fed.

The result is a generation of participants trained to decode tone shifts rather than evaluate capital allocation, productivity, or inflation dynamics.

If the Warsh Fed is forcing that ecosystem to operate without a script, the discomfort you’re seeing isn’t dysfunction, it’s withdrawal.

Markets that can’t function without being spoon-fed aren’t efficient. They’re dependent. A new era has begun and some of the cool kids on Wall St are upset. Let them!

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