On Monday, Stephanie Pomboy, the founder of macro research firm MacroMavens, rained on Wall Street’s victory parade following the trade war de-escalation between the U.S. and China.

What Happened: Referring to the rally as a “headline sugar rush,” Pomboy believes the market is misreading the situation. “To listen to the financial media, you’d think it was the final agreement, and it ain’t,” she said on Kitco News, referring to the temporary tariff pause.

While equities rallied, Treasuries were telling a different story, according to Pomboy, “10-year yield just surged to 4.45%,” she says, calling the instrument “recalcitrant,” given its growing unpredictability and lack of cooperation with macroeconomic signals.

See More: Trump Lowers De Minimis Tariff On Chinese Imports From 120% To 54%, Pauses $200 Postal Fee Amid 90-Day Trade Shift

With more than $2 trillion in Treasury issuance on the horizon and major foreign buyers like China pulling back, “Who's going to buy $2 trillion worth of paper?” She asks.

The U.S. Treasury is expected to issue new debt in 2025 to finance ongoing federal deficits. Recent projections include $514 billion in borrowing for the April–June quarter and $554 billion for July–September, with similar amounts in earlier quarters. On an annualized basis, total borrowing exceeds $2 trillion.

She further warned that the Federal Reserve may ultimately be forced back into balance sheet expansion. “The Fed is the only obvious candidate to absorb all this issuance,” Pomboy said, adding that credit stress is growing despite a lack of response in spreads.

“This is a structural fiscal problem,” she says. “The market's partying on tariffs, but the foundation is cracking.”

Why It Matters: Last week, Michael Hartnett, a Chief Investment Strategist at Bank of America Corp. ( BAC ) echoed similar views, stating that 5% Treasury Yields could push the U.S. Government to walk back on its protectionist trade policies.

This comes amid the Treasury ramping up its borrowing, at $514 billion, up 317% from its own forecast of $123 billion made just two months ago.

Read More:

Apple May ‘Up Its Numbers’ Amid China Tariff Truce: Trump Talks $500 Billion US Investment After Tim Cook Call