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U.S. Markets Under Pressure: Bond Yields Surge Amid Mounting Deficit and Inflation Fears
U.S. stock markets posted mixed performance on Thursday following a sharp sell-off on Wall Street, driven by growing concerns over the widening U.S. fiscal deficit.
30-year Treasury yields surged to their highest levels since October 2023 after the House of Representatives passed a controversial bill featuring tax cuts and increased military spending. Investors fear the legislation could significantly inflate the national debt and deepen the federal budget deficit.
The Dow Jones Industrial Average dropped 68 points, or 0.2%, while the S&P 500 also fell 0.2%. The Nasdaq Composite posted a slight decline, remaining close to its previous closing level.
The bill, which passed the House in a partisan vote Thursday morning, now moves to the Senate for consideration. The Congressional Budget Office (CBO) estimates the legislation could add approximately $4 trillion to the national debt. These developments come amid rising market anxiety over a potential resurgence of inflation, fueled in part by Trump-era tariffs.
Bond markets reacted swiftly: 30-year Treasury yields neared 5.1%—a level not seen since 2023—while 10-year yields dipped slightly below 4.6%.
Economists warn that rising long-term interest rates, which serve as a benchmark for consumer and mortgage loans, could further pressure an already fragile U.S. economy. The country is still grappling with the consequences of protectionist trade policies and slowing growth.
Markets were rattled a day earlier when the Dow Jones plunged over 800 points, and the S&P 500 dropped 1.6%, driven by weak demand in a 20-year Treasury auction, which contributed to rising yields and falling stock prices.
