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17h ago

Trump’s Tax-and-Spending Bill Faces Senate Scrutiny as Bond Markets Signal Alarm

The House-passed package, projected to add trillions to the deficit, prompts a credit rating downgrade, weak Treasury demand, and global investor retreat.

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The Japanese yen's rate against the US dollar and the Nikkei Stock Average in Tokyo on May 1.
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Overview

  • The U.S. House narrowly passed President Trump’s sweeping tax-and-spending bill, sending it to the Senate for potential revisions and approval.
  • Moody’s downgraded the U.S. credit rating from AAA to AA1, citing mounting fiscal risks and unsustainable debt trajectories.
  • Long-term Treasury yields have surged past 5%, driven by weak demand at a $16 billion bond auction and investor concerns over growing deficits.
  • Global investors, particularly in Asia, are reducing U.S. Treasury holdings as policy uncertainty and rising yields erode confidence in dollar assets.
  • Trump’s renewed tariff threats, including 25% on Apple and 50% on EU goods, have added to market volatility and heightened trade tensions.