On Monday, U.S. assets were sold, fiscal issues caught the eye after losing the country’s triple A credit rating, with Donald Trump’s massive tax and budget bill clearing obstacles to Congress.
During the Asian trading period, the yield on U.S. Treasury bonds rose as much as 0.06 percentage points to 5%, while the 10-year yield rose 0.04 percentage points to 4.52%. Bond yields are inversely proportional to the price.
U.S. stock futures for the U.S. 500 and Nasdaq stock fell 1% and 1.3%, respectively. Gold prices rose 0.5% to $3,216 per ounce, while one dollar fell 0.3%.
The rise in bond yields comes after Washington approved Trump’s tax bill on Sunday night, after Moody’s downgrades the U.S. Triple-A sovereign credit rating on Friday night. The rating agency warns that government debt levels continue to rise and budget deficits expand.
"The bill is helping to improve the far end," said Subadra Rajappa, head of U.S. interest rate strategy at Sociétégénérale. “Outside the anecdotal evidence of price action, it is always difficult to tell in the market, but it does seem to be consistent.”
Five Republican members of the House Budget Committee voted against the bill on Friday, stagnating their progress. The plan almost passed the committee's vote on Sunday.
Trump has put pressure on the party’s lawmakers to vote for the bill. "The Republican Party must unite, 'a, big beautiful Bill!'. "We don't need the "princess" in the Republican Party. Stop talking and finish! ”
The legislation includes hundreds of billions of new tax cuts that are not offset by spending changes and are expected to increase the federal deficit, which was 6.4% in 2024, far higher than economists consider sustainable in the long term.
A larger deficit means more Treasury bills, lower prices and increase yields. Investors sell bonds, expect additional supply, and potential inflationary impacts from tax cuts.
The government believes tax cuts will increase growth, increase revenue and lower the U.S. deficit. However, the Commission’s Budget Tax Act, which is responsible for the federal budget, could total as much as $520 million in 10 years.