The bond market (^TNX, ^TYX, ^FVX) has been flashing warning signs of more bond turmoil. Yahoo Finance Senior Reporter Allie Canal joins Market Domination Overtime with Josh Lipton and Julie Hyman to discuss this week's surge in Treasury yields driven by fears of an impending US debt crisis.
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As we've been talking about, the bond market has been flashing warning signs once again. For more, bringing in senior reporter Ali Canal with the Yahoo Finance investor playbook.
Long-term treasury yields surging this week, driven by growing fears over America's mounting debt crisis. The 30-year yield spiking as high as 5.15%, the biggest single day jump since 2023 and flirting with levels not seen since 2007. Wall Street experts say the recent move to the upside is a warning sign that investors are demanding higher returns to offset growing fiscal risks. At the center of it all is President Trump's newly advanced tax bill which just passed the house. The bill proposes sweeping cuts to personal and corporate tax rates, but it's also projected to add $4 trillion to the national debt over the next decade. Despite its size, the bill offers little in the way of immediate spending cuts, something that's further spooking markets. Here's more of what Wall Street watchers told us this week.
What's making things worse is that we have an unsustainable fiscal situation that is leading to very challenging dynamics in the bond markets where we're having to pay higher interest rates to service our debts.
long end of the curve, there's a tremendous amount of uncertainty and we're starting to see investors get a little spooked.
Listen, there is not good news here. Congress has the ability to reverse course. They have the ability to not pass this legislation and that would be really good for the economy and I think that's what the bond market is saying right now. Woah, let's not go down this path.
Now, sources tell me that while the US deficit appears to be the main driver of this bond market volatility, it's not the only factor. We're also seeing cracks in demand, a weak treasury auction earlier this week raised some eyebrows and over in Japan, a deepening fiscal crisis there is sparking fresh fears that global bond market stress could bleed into US markets as well. So a lot to keep track of over the coming days. We'll be watching closely as this tax bill moves to the Senate. I'm sure, especially if this week was any indication, Wall Street will be reacting.
Thanks, Ally. Appreciate it.
