Moody’s downgraded the U.S. sovereign credit rating due to debt concerns, but the Big Beautiful Bill passed, preventing a bond market “crack.” 30-year Treasury Bond futures traded steadily, remaining within a trading range. Despite a bearish trend since Q1 2020, bonds are holding steady above lows.

The Fed Funds Rate remains unchanged at 4.375%, with President Trump advocating for a 2% reduction. The Fed forecasted 50 basis point rate cuts by 2025’s end, but tariffs and CPI data may delay them. Long-term rates are influenced by market sentiment, with no guarantee lower short-term rates will lead to lower long-term rates.

The U.S. debt has surpassed $37 trillion, prompting Moody’s credit rating downgrade. Economists debate the impact of rising debt on economic growth, interest rates, and potential crises. While manageable with the ability to issue debt in U.S. dollars, the government must address the debt to maintain economic stability.

The iShares 20+ Year Treasury Bond ETF (TLT) tracks long-term U.S. interest rates, trading within a range between $83.30 and $101.64 since early 2024. TLT remains highly liquid, with assets over $47.6 billion under management. The ETF’s performance depends on the U.S. debt levels and economic initiatives’ success.

Read more at Yahoo Finance: Will U.S. Government Bonds Rally?