From Yahoo Finance: 2025-05-27 15:45:00

Wall Street is monitoring the bond market closely after a surge in long-term Treasury yields, fueled by concerns over Trump’s proposed tax legislation. The 30-year Treasury yield reached 5.15%, near its 2007 levels, due to deficit worries, fiscal instability in Japan, and a weak Treasury auction. The 10-year Treasury yield also rose above 4.6%, the highest since February. Even though yields dipped slightly amid reports of Japan reducing bond issuance, investor anxiety remains high. Analysts are concerned about the fiscal impact of Trump’s tax bill, which could add $4 trillion to the national debt over the next decade.

The bill, which passed the House and heads to the Senate, proposes tax cuts without significant spending reductions, exacerbating fears about the already fragile fiscal situation. Long-term yields, crucial for the real economy, have a greater impact than the Fed’s benchmark rate on borrowing costs like mortgage rates. As investors anticipate two rate cuts, the uncertainty surrounding fiscal policy adds to broader market concerns about long-term yields. This poses a challenge for the Fed in easing monetary policy, especially if long-term yields remain high, hindering the impact of rate cuts on supporting growth.



Read more at Yahoo Finance: Wall Street braces for more bond turbulence as traders bet Washington won’t tackle deficits