According to Jinshi, the Congressional Budget Office (CBO) of the United States released a new budget estimate, with the deficit increasing by $408 billion from the estimate in February, and the corresponding deficit rate rising from 5.6% to 7%, far higher than the market median expectation of 5.8%. CBO expects the deficit to reach $1.9 trillion in fiscal year 2024, which is basically the same as the $1.86 trillion figure released by the White House Budget Office. This also echoes the net financing plan of about $1.92 trillion for U.S. debt for the whole fiscal year given by the TBAC meeting at the end of April. The restart of fiscal efforts will further support market liquidity and the real economy, and the urgency and magnitude of interest rate cuts may be weakened, that is, the policy combination of "loose fiscal and tight monetary" may continue longer. However, in a highly uncertain election year, we still believe that it is necessary to cut interest rates this year or even before the election.
