Foreign demand for US government bonds is falling off a cliff. Investors fear that this could actually trigger a US debt crisis. But the Treasury has just started executing a plan that nobody is watching. A thread 🧵

25/ But if the Federal Reserve raises rates sharply, then this entire plan falls to pieces. Because higher short-term rates would increase the government's borrowing costs and put pressure on the market Bessent is increasingly relying on. This can create a potential conflict between the government's desire to maintain spending and the Fed's mandate to control inflation. So, the outcome depends heavily on how those 2 objectives interact as monetary policy evolves.