From Yahoo Finance: 2025-06-03 12:43:00

The bond market is in turmoil due to conflicting factors: pro-growth stimulus from Trump’s tax bill and inflationary pressures from tariffs. Long-term yields have risen, with the 30-year Treasury yield near 4.96%. Concerns over mounting deficits and policy risks are driving the increase. The Fed is expected to keep short-term rates steady.

Trump’s tax bill, projected to add $4 trillion to the national debt, is causing unease in the bond market. Nobel Prize-winning economist Paul Krugman warns that recent market signals resemble those of developing economies. Rising interest rates and a weakening dollar are concerning, indicating a potential loss of confidence in America’s fiscal credibility. Foreign investors may be turning away from US assets.

Krugman highlights Treasury Secretary Bessent’s reassurance that the US will not default on its debt, calling it an alarming sign of growing skepticism abroad. The decline in foreign investment could harm US growth. The flood of foreign money is dwindling, signaling potential trouble ahead.

Read more: Bond market ‘caught in the middle’ amid Trump tax bill push, tariff risk