The tax cut and increased government spending on infrastructure et. al. would traditionally fuel increased inflation: both actions put more money into the market and more money often leads to increased prices. It would not be unusual for the fed to want to get some of that money out of the market to keep inflation under control. In the past they’ve done this by increasing the interest rate on treasuries as an incentive to get us to loan them the money we’d otherwise be buying stocks or “stuff” with. Getting the money out of circulation is supposed to reduce the threat of inflation.
Whether or not that always works the way it’s supposed to is debatable, at least in the short term of a year or two, but eventually it does seem to work. And those treasuries can become a competitive alternative to stocks when rates go up. If I could get a guaranteed 8% on a 30-year Treasury or a “hoped for” 11% in stocks over the same period, I’d give the treasuries a hard look. Especially as I am getting older and don’t have as much time to make up short term losses in the market. A lot of Americans are getting older... if rates go up just a few percent from here, I could see a lot of stock money come off the table and into bonds.
