> But if DOGE can really cut $1 trillion by end of year, it will have positive knock-on effects in the bond market.

It will certainly be interesting to see how the US economy will be affected by $1 trillion less money circulating.

How and why would this produce positive knock-on effects in the bond market?

I presume the idea of $1 trillion less bonds being issues would decrease supply and decrease the price we need to charge. (More demand for the same supply decreases bond prices). This would have the impact of reducing the interest payments in the federal budget, which is becoming burdensome.

I personally am just as worried that reducing US gov spending will worsen a potential 2025 or 2026 recession (which might lower rates...)