So Steve Mnuchin is going to sell some debt, ok? And he’s going to be selling a lot of it.

That’s because world-renowned economist Donald Trump has decided that contrary to theory and also contrary to common sense, he’s going to go ahead and pile a deficit-funded tax cut and all manner of other fiscal stimulus atop a late-cycle economy operating at full employment.

The reason he’s doing that is because he needs to fulfill his populist promise to usher in a veritable American renaissance. Despite the fact that no one even knows what Trump means by “great” (more on “the nostalgia of greatness” here), everyone is apparently just fine with mortgaging the country’s future to finance a return to it. Even if it means putting America on a fiscal trajectory with no historical precedent:

That’s on the way to putting America in worse fiscal shape than Italy by 2023 (which, conveniently, is when this will no longer be Donald Trump’s problem).

This is why Wednesday’s Treasury refunding announcement was so closely watched and while you can read the details here, the bottom line is that, as noted above, Steve Mnuchin is going to be selling some debt and while he’s pretty sure it will be absorbed, the question is not whether the market will clear, the question is “at what price?”.

As you’re hopefully aware, this is part and parcel of a wider debate about what happens when fiscal policy turns expansionary in a world where central banks are trying to replenish their ammo by running down their balance sheets or otherwise pulling back on their support for the market. Clearly, central bank asset purchases have distorted the supply/demand dynamics in fixed income beyond recognition and as I never tire of reminding people, that was precisely the point. You engineer a hunt for yield that drives investors down the quality ladder and along the way, everything from the most sterling of credits to the shoddiest of shit gets priced to perfection.