President Trump’s proposed “big beautiful bill” featuring tax cuts and increased spending has sent shockwaves through the bond market, with investors fearing it will sharply increase US national debt. The bill has passed the House of Representatives and is now heading to the Senate.
The Treasury Department’s recent auction of $16 billion in new 20-year bonds saw yields rise from 4.6% to 5.05%, sparking concerns among investors about growing uncertainty in US economic policy. Convera’s Kevin Ford noted that the lack of demand raised red flags in the market, while Saxo Bank’s Charu Chanana described it as “distress flares” in the bond market.
Analysts are warning that President Trump’s tax cuts and spending could lead to a downgrade in US debt quality from Moody’s. John Fath of BTG Pactual Asset Management said, “People are getting fed up. It’s clear that there are no adults in the room in Washington.” Vincent Mortier, chief investment officer at Amundi, stated that the US is no longer considered a safe haven for investors.
Even some voices that are typically calm on macroeconomic issues are warning of potential doom. Goldman Sachs noted that while the Moody’s downgrade may not impact institutional investors’ ability to own US Treasury bonds in the short term, it could lead to a material slowdown in growth and lower yields.
The stock market remained relatively calm this morning, with S&P futures flat prior to the open. However, some stocks did see gains, including Coinbase, which rose 5% on news of President Trump’s “crypto dinner.”
Source: https://fortune.com/2025/05/23/bond-market-trump-tax-bill