From Yahoo Finance: 2025-05-24 08:45:00

The U.S. House narrowly passed President Trump’s tax-cut bill, causing 30-year Treasury bond yields to surge to 5.15%, the highest since October 23, 2023. The bill, totaling $3.8 trillion, received a slim 215-214 vote and is headed to the Senate for approval before July 4, potentially increasing the national debt by trillions over the next decade.

JPMorgan CEO Dimon believes Trump’s plan may stabilize the business cycle but won’t fix America’s fiscal path, warning of a growing deficit. Credit analysts and investors fear unchecked spending could undermine confidence in U.S. debt. The bill could add $2.3 trillion to $5.7 trillion to the national debt by 2034, raising concerns of a potential debt crisis.

Investors worry about a debt crisis as Moody’s downgrades U.S. sovereign credit and the S&P 500 reacts poorly to recent economic events. Analysts speculate bond vigilantes could push 10-year Treasury yields above 5%, prompting a potential buying opportunity for stocks if Washington enforces fiscal discipline. Federal Reserve intervention and Treasury issuance adjustments may alleviate pressure on long-term yields.

With federal debt at $36.2 trillion, even slight rate increases could dramatically raise borrowing costs, intensifying concerns about long-term fiscal sustainability. The Federal Reserve may resort to new quantitative easing or adjust Treasury issuance to manage financing pressures. Treasury’s Yield Curve Control makes U.S. debt more vulnerable to interest rate fluctuations, increasing rollover risk as debt matures faster.



Read more at Yahoo Finance: 30-Year Yields Jump To 5.15% As Bond Market Freaks