Shenwan Hongyuan Group: The re-emergence of US debt panic, what did the market misunderstand?

Shenwan Hongyuan Group released a research report stating that on January 20th, the overseas market once again saw a "stock-bond-forex triple kill." The market often mistakenly believes that debt expansion will lead to a collapse of US and Japanese debt, and there may be a future outbreak of debt default risk. However, for developed countries with sovereign currencies, the central bank has nearly unlimited currency issuance capabilities, making the possibility of substantial default lower. Debt crises in emerging markets often manifest as credit risks, while in developed countries with sovereign currencies, they often manifest as currency depreciation and rising inflation expectations. The main points of Shenwan Hongyuan Group are as follows: 1. Under the impact of the US stock-bond-forex triple kill, Trump withdrew tariffs on Europe again. Although the short-term market impact has temporarily eased, fundamental contradictions related to debt and geopolitics have not been resolved. As debt continues to expand, Trump is adopting more "flexible" financial suppression measures. 2. Hotspot analysis: What did the market misinterpret in the US debt panic reenactment? - A global debt market panic has recurred, with the US experiencing a "stock-bond-forex triple kill" and Trump withdrawing tariffs. - On January 20th, the overseas market once again saw a "stock-bond-forex triple kill." Global bonds from the US, Europe, and Japan were collectively sold off, while risky assets like equities experienced a general decline. The dollar weakened, and safe-haven assets like gold strengthened. - Core triggers for the stock-bond-forex triple kill include the US-Europe Greenland dispute causing tariff concerns, Denmark's pension fund announcing its withdrawal from US bond investments potentially weaponizing US bonds, and Japan's weak auction of government bonds due to high market risk of selling off US bonds. 3. Looking ahead, Trump may adopt "structural" financial suppression measures to lower real interest rates, but it is not advisable to expect the Federal Reserve to implement Yield Curve Control (YCC). - The market often mistakenly believes that debt expansion will lead to a collapse of US and Japanese debt, and there may be a future outbreak of debt default risk. But for developed countries with sovereign currencies, the central bank has nearly unlimited currency issuance capabilities, making the possibility of substantial default lower. Debt crises in emerging markets often manifest as credit risks, while in developed countries with sovereign currencies, they often manifest as currency depreciation and rising inflation expectations. - To alleviate debt risks, Trump may adopt "structural" financial suppression measures and lower real interest rates. Possible measures that the US may take include government involvement in rate expectations, expanding liquidity repurchase tools for the Treasury Department, adjusting the duration structure of debt issuance to reduce long-end impacts, relaxing the Supplementary Leverage Ratio, and reforming loan rate pricing. 4. In a non-war or non-zero interest rate state, the Federal Reserve is extremely unlikely to lower US bond interest rates through QE or YCC. The history of global central banks shows that zero interest rates are a prerequisite for QE or YCC, as the objective of QE or YCC is to lower long-term interest rates, and the most effective way to accomplish this is by lowering rates to zero (or negative). Risk warning: Escalation of geopolitical conflicts; US economic slowdown exceeds expectations; Federal Reserve unexpected hawkish turn