The US bond market is raising serious concerns over President Trump’s “big beautiful bill,” which includes tax cuts and increased spending, amid fears that it could drastically expand the national debt. The bill has already passed the House of Representatives and is now heading to the Senate.
In the latest 20-year Treasury bond auction by the US Department of the Treasury, yields surged sharply from 4.6% to 5.05%, reflecting the market’s tepid appetite for new US debt. Analysts see this as a clear signal that investors doubt the US’s ability to refinance approximately $3 trillion of debt maturing in 2025.
Some analysts, such as those from Saxo Bank and Amundi, have voiced concerns that the US is no longer seen as a safe investment haven due to extreme fiscal indiscipline. Moody’s has already downgraded the US debt rating.
While global equity markets remain relatively calm, the bond market is delivering a stark warning. Investors remain cautious about the US economic outlook amid fiscal policy uncertainty and the potential for an economic slowdown.
Market Moves:
- The S&P 500 closed flat at 5,842.01.
- The 10-year Treasury yield rose to 4.63%, while the 30-year yield climbed to 5.15%.
- Asian and European markets edged up slightly ahead of the US market open.
- Asset rotation is increasingly possible, with funds moving from FX into other investment instruments, including gold and currencies.
