US Treasury Yields Rise After House Passes Tax Bill Increasing Deficit

The recent passage of President Donald Trump's 'big, beautiful' tax bill by the House of Representatives has intensified concerns over the U.S. fiscal deficit, as it is projected to add nearly $4 trillion to the national debt, combining tax cuts and increased defense spending. This has led to elevated U.S. Treasury yields, with the 30-year Treasury bond reaching its highest levels since 2007, reflecting investor wariness about the safety and attractiveness of government debt amid growing deficits. Moody's downgrade of the U.S. credit rating further amplified market anxiety, though some relief came from the Supreme Court's indication that Federal Reserve members might receive greater protection from presidential dismissal, stabilizing confidence in Fed leadership. While stocks have shown mixed reactions, including a slight decline in major indexes and selective gains in sectors like mortgage finance, investors remain cautious about long-term economic impacts, especially as concerns about inflation and bond supply persist. European markets appear somewhat insulated, supported by stronger-than-expected economic data from Germany and the UK, offering a contrast to U.S. market volatility. Overall, the bill's short-term economic boost is tempered by apprehension over increasing debt levels and their implications for fixed-income investments and broader financial stability.