Stealth QE is Coming

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Stealth Stimulus

You might remember the roaring 2021 stock market and how government stimulus cheques played a major role in juicing the economy and pumping up stocks. Well, something similar is happening again, only this time the stimulus is coming from trade deals and tariffs.

Take the recent deal with the EU, for example. The EU agreed to invest $600B into the US economy, buy $750B of American energy resources, spend hundreds of billions on American military equipment, AND STILL be subjected to a 15% tariff (which is tax revenue for the US). This is a major win for the US as it brings in investment dollars, tax receipts, and stimulates the economy, without the need to print a single dollar or raise a cent of national debt. Japan and South Korea made similar investment commitments, which means altogether the US will receive trillions of dollars’ worth of stealth stimulus.

This just goes to show how lopsided the trade deals are, and how successful Trump’s tariff saga has been. The US was able to leverage tariffs to secure hugely advantageous agreements with the rest of the world.

At the same time, the Treasury is doing bond buyback operations and shortening the duration of its bond issuances. This effectively keeps long-term Treasury yields low and provides liquidity to banks who hold the bonds. The result will be similar to Quantitative Easing (QE) because it shifts cash into the bond market in a liquidity-supportive way, without having to go through the Fed. As you can guess, this is supportive of risky assets like stocks and crypto.

It is difficult to overstate how impactful these stimuli will be. Together, the influx of foreign capital, tariff revenues, bank liquidity injections, and lower interest rates create a powerful tailwind for markets. Unlike the post-2020 stimulus, which relied on monetary expansion and ballooned the national debt, this approach injects fresh money from external sources while keeping inflationary pressures contained. If history is any guide, this combo could ignite another bubble in stock markets and crypto.

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