Will the pessimistic outlook for US Treasuries change after the midterm elections? [Dapeng Talk 7]

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As bearish views on US Treasuries become more prevalent, is the market overlooking the possibility of change?

In the 7th episode of "Da Peng Talks," Peifengke’s Chen Dapeng raises a question worth reconsidering: The long-term pressure on US finances still exists, but could the logic supporting the rise in long-end US Treasury yields change after the midterm elections?

To understand this issue, it's important to distinguish one thing: taking control of Congress does not equate to being able to change everything. Even if the Democrats win both chambers, they may not be able to cut spending from existing bills; however, new constraints may gradually emerge on personnel appointments and fiscal negotiations.

How will these constraints affect current market trades on AI growth, inflation, and the Federal Reserve's independence? Why hasn't long-term risk disappeared, and why might short-term pessimistic expectations still need to be reconsidered?

"Politics is a leading indicator for interest rates." Based on this judgment, Dapeng starts from Congress’s scope of authority to break down the driving factors behind US Treasury yields, explaining which concerns persist and which basic assumptions may be loosening.

This episode also extends the discussion to gold and copper: How do Federal Reserve policies, macroeconomic expectations, and industry inventories each influence his observations? Why do these two commodities require attention to different variables and paces?

Click the image below to enter the main text of this episode and see how Dapeng connects these changes into a complete analytical framework.