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How the Fed Reads the Budget Deficit Surge
The July budget deficit hit its highest level since March 2021, yet the Fed seems unfazed. In this episode of The Macro Memo, Lucas and Luna unpack why the central bank watches the deficit with a long-term lens, how bond markets are pricing in the surge, and what it means for the ten-year Treasury yield at 4.71 percent. They connect the dots between record federal borrowing, the Fed's independence, and the subtle signals in breakeven inflation rates. If you've ever wondered why the Fed doesn't panic when the deficit balloons, this conversation gives you the framework—without…
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