With US interest rates in turmoil, all the money is flowing into 'this asset'｜Seong Sang-hyeon's Macro Beyond, Part 3-3

Seong Sang-hyeon interprets the Fed's plan to reduce its holdings of long-term Treasury securities and increase the share of short-term Treasury securities not as unilateral tightening, but as a possible form of policy coordination with the Treasury. His reasoning is that if the Fed and stablecoins become structural sources of demand for short-term Treasury securities, the Treasury could reduce long-term Treasury issuance, potentially stabilizing long-term interest rates. He believes that lower long-term interest rates, combined with the easing of banking regulations, could turn cash into lending and sustain a cycle of corporate investment and AI-centered credit expansion. He describes this as a modern variation on the 'Treasury-Fed Accord,' which reduced the debt ratio through growth and financial repression after World War 2, while suggesting that rather than using direct interest-rate caps as in the past, policymakers could use the maturity structure of Treasury securities, buybacks, and stablecoin demand. In an environment of persistently high interest rates and inflation, he expects a K-shaped market in which money does not spread across all assets but concentrates in a small number of productivity-enhancing industries and leading stocks, such as AI, blockchain, AI agents, and humanoids. The key indicators to monitor are the mix of long-term and short-term Treasury issuance in the November (month 11) QRA, Treasury buybacks, banks' cash ratios and lending growth, discount-window regulations, demand for short-term Treasury securities from money market funds and stablecoins, and SOFR stability. Ultimately, he argues that liquidity is not disappearing but moving from the Fed's balance sheet to banks' balance sheets, from long-term bonds to short-term bonds, and from traditional deposits to digital dollars, and that its route will determine the next leading stocks.