Thoughts from -> Michael Hartnett, BofA | “Success is Expected, Failure Is Unthinkable” US is moving toward a form of “quasi-QE”, largely because policymakers need to contain long-term Treasury yields and government financing costs. •Bessent’s “3-3-3” plan is well behind target: real GDP growth is below 2% vs. a 3% target; the fiscal deficit is around 6% of GDP vs. 3%; and oil production has increased by only ~0.3m barrels/day since 2024 vs. the targeted +3m. •US federal debt has crossed $40tn, while Treasury issuance remains enormous. At the same time, AI/hyperscaler companies are issuing increasing amounts of debt – BofA estimates they could represent roughly 9% of gross US investment-grade bond supply in 2026. This creates significant competition for capital. •The Treasury has doubled buybacks of longer-dated bonds. Hartnett characterizes this as “quasi-QE”: it is not traditional Fed quantitative easing, but it effectively aims to support the Treasury market and prevent long-term yields from rising too far. •The critical threshold is approximately 5% on the 30-year Treasury yield. If policymakers cannot keep it below that level, Hartnett sees a potential loss of policy credibility and greater financial-market stress. •Policymakers are effectively defending several “Maginot Lines”: long-term Treasury yields, gasoline/oil prices, and USD/JPY around 160. •Energy policy is constrained because the Strategic Petroleum Reserve and broader US crude inventories are historically low, limiting the government’s ability to suppress oil prices through reserve releases. Hartnett remains long gold, expecting monetary/fiscal intervention and liquidity support to continue benefiting asset prices, as previous QE episodes did. The important tail risk is the opposite scenario: if “QE5”/quasi-QE fails to keep the 30-year yield below ~5%, Hartnett expects a weaker US dollar, deleveraging, and a rotation away from long-duration/high-leverage assets toward short-duration and low-leverage exposures, including some financials. Markets increasingly assume that US authorities will intervene whenever Treasury-market stress threatens the financial system or AI investment boom. Because intervention success is already expected, policy failure could be considerably more disruptive than another successful intervention would be positive.