Bond market jitters increase as Moody's US credit downgrade and rising debt levels spark concerns
From Yahoo Finance: 2025-05-21 09:33:00
Bond market jitters return as Moody’s US credit downgrade sparks concerns over fiscal trajectory. 30-year Treasury yields briefly hit 5% before dropping to 4.94%, then rising again. Rising yields signal investors selling bonds, contrary to typical flight-to-safety response. Analysts warn of fiscal uncertainty and inflation impacting long-term yield volatility. Trump’s proposed tax bill raises debt ceiling by $4 trillion, narrowing US fiscal space. Analysts predict ‘sell the US’ trend with potential negative fiscal issues and budget uncertainties. Steeper US Treasury yield curve reflects concerns over rising debt and borrowing costs. Term premium rises amid fiscal and policy uncertainties, signaling growing global economic concern. Recession risk elevated due to tariff uncertainty, potential impact on debt sustainability and fiscal response. Moody’s credit downgrade prompts global investors to seek more attractive returns elsewhere. Structural reasons may lead to outflows from the US market. Current policies make it challenging to attract foreign buyers for US Treasurys. The government is facing a dilemma as it limits capital inflows to finance upcoming spending bills and activities. Senior Reporter Allie Canal discusses the conflict between shrinking the capital account and the urgent need for funding. Stay updated on the latest stock market news and financial updates on Yahoo Finance. Follow Allie Canal on Twitter and LinkedIn for more insights.
Read more at Yahoo Finance: Bond market jitters rise on ‘narrative shift’ from positive tariff news to mounting US debt crisis