Over the past five months, we’ve frequently asked the same question:

What changed on September 8??

You may recall that September 8 was the day the bond market abruptly turned, taking with it the USDJPY and DXY. In the wee hours of September 8, the Dollar Index hit 91.01, the USDJPY hit 107.32 and, most importantly, the yield on the 10-year note hit 2.02%.

In the five months since, the dollar has rallied and then fallen to new lows. The USDJPY has rallied and fallen back, but the yield on the 10-year has risen to 2.88% with no end in sight!

And so: what happened on September 8?

We’ve asked this question repeatedly, and now we know we’ve had the answer all along. Our first inclination was that the Oval Office meeting between Trump, Pelosi and Schumer had changed the prevailing dynamic. As it turns out, we were right. Here’s a list of links if you need a refresher:

It was this September 7 meeting that changed everything, and the action in the US bond market since then confirms it. There will be no more charade of “fiscal discipline”: the US will cut taxes and raise spending, the future be damned.

We see confirmation in a collection of this week’s headlines. The imaginary debt ceiling is being done away with. Trump has already signed a massive tax cut and is about to unveil $1.7T in new infrastructure spending.

In short, the US debt and deficit is about to balloon, likely exceeding $1T in this fiscal year and soaring past $1T in 2019 … and these levels will only be this “small” IF the US avoids falling into recession. See these charts from ZeroHedge: