Latest news with #ShaiAkabas
Yahoo
25-05-2025
- Business
- Yahoo
'Unsustainable fiscal situation': Wall Street braces for more bond market turmoil as Trump tax bill stirs up deficit concerns
The bond market is once again flashing warning signs. Long-term Treasury yields surged this week as investors grew increasingly uneasy about the ballooning US deficit and the fiscal outlook tied to President Trump's proposed tax legislation. The sell-off in bonds, typically a safe haven in uncertain times, runs counter to traditional flight-to-safety behavior and has stoked fears of a broader "sell America" trade taking hold across global markets. "Clearly, the market is very focused on two key things: the tariff news and this policy framework of debt and deficits with interest rates," WisdomTree Global chief investment officer Jeremy Schwartz told Yahoo Finance on Thursday. "If interest rates blow out because there's fear about the deficit [and] we don't actually bring down spending ... that's one of the [key] downside risks." While ballooning deficits have long been a concern, the latest wave of investor unease reflects a collision of both new and familiar threats, with fiscal fears, stubborn inflation, and political uncertainty top of mind. At the center of it all is Trump's newly advanced tax bill, which cleared the House this week and is now headed to the Senate. "We have an unsustainable fiscal situation that is leading to very challenging dynamics in the bond markets where we are having to pay higher interest rates to service our debts," Shai Akabas, director of economic policy at the Bipartisan Policy Center, told Yahoo Finance on Friday. "That ultimately is leading to higher interest rates across the economy and feeding the inflation that we've seen in past years, and that we might continue to see from the tariff dynamic that's going on." The legislation proposes sweeping cuts to individual and corporate tax rates and is projected to add $4 trillion to the national debt over the next decade. Despite its scale, the bill lacks swift and substantial spending cuts, fueling investor anxiety over the US's already fragile fiscal situation. "The House bill is probably the floor for what deficits look like," Deutsche Bank senior US economist Brett Ryan said. "The Senate is going to have its say, and that's probably going to mean even less in terms of spending cuts." Ryan noted that while the bill claims over $1 trillion in savings, most of that is backloaded beyond the current presidential term. "Will it ever happen?" he asked, casting doubt on whether the proposed fiscal tightening will materialize. Read more: What are bonds, and how do you invest in them? The bond market's reaction to the legislation has been swift. The 30-year Treasury yield (^TYX) surged as high as 5.15% this week, marking its biggest intraday move since 2023 and approaching closing levels not seen since 2007. These moves were driven not only by renewed fiscal concerns at home but also by a weak Treasury auction and escalating fiscal turmoil in Japan. Prime Minister Shigeru Ishiba's warning on the country's finances triggered a bond sell-off and stoked global fears about waning demand for US Treasurys. "The long end of the curve, there's a tremendous amount of uncertainty," Asterozoa Capital chief investment officer Joe Hegener said on Friday, describing recent market moves as a "material risk" to stocks and the broader US economy. "We're starting to see investors get a little spooked," he continued. "What's going on in Japan and abroad is only exacerbating that risk." While short-term yields have stayed relatively anchored amid expectations that the Fed will hold interest rates steady, longer-term yields have climbed more sharply as investors demand greater compensation for mounting fiscal and policy uncertainties. Heather Boushey, who served on President Joe Biden's Council of Economic Advisors, said the recent surge in yields may signal mounting fears of stagflation and deeper economic strain. "There is not good news here," she said, adding that the bond market's message is clear: "Let's not go down this path." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
25-05-2025
- Business
- Yahoo
'Unsustainable fiscal situation': Wall Street braces for more bond market turmoil as Trump tax bill stirs up deficit concerns
The bond market is once again flashing warning signs. Long-term Treasury yields surged this week as investors grew increasingly uneasy about the ballooning US deficit and the fiscal outlook tied to President Trump's proposed tax legislation. The sell-off in bonds, typically a safe haven in uncertain times, runs counter to traditional flight-to-safety behavior and has stoked fears of a broader "sell America" trade taking hold across global markets. "Clearly, the market is very focused on two key things: the tariff news and this policy framework of debt and deficits with interest rates," WisdomTree Global chief investment officer Jeremy Schwartz told Yahoo Finance on Thursday. "If interest rates blow out because there's fear about the deficit [and] we don't actually bring down spending ... that's one of the [key] downside risks." While ballooning deficits have long been a concern, the latest wave of investor unease reflects a collision of both new and familiar threats, with fiscal fears, stubborn inflation, and political uncertainty top of mind. At the center of it all is Trump's newly advanced tax bill, which cleared the House this week and is now headed to the Senate. "We have an unsustainable fiscal situation that is leading to very challenging dynamics in the bond markets where we are having to pay higher interest rates to service our debts," Shai Akabas, director of economic policy at the Bipartisan Policy Center, told Yahoo Finance on Friday. "That ultimately is leading to higher interest rates across the economy and feeding the inflation that we've seen in past years, and that we might continue to see from the tariff dynamic that's going on." The legislation proposes sweeping cuts to individual and corporate tax rates and is projected to add $4 trillion to the national debt over the next decade. Despite its scale, the bill lacks swift and substantial spending cuts, fueling investor anxiety over the US's already fragile fiscal situation. "The House bill is probably the floor for what deficits look like," Deutsche Bank senior US economist Brett Ryan said. "The Senate is going to have its say, and that's probably going to mean even less in terms of spending cuts." Ryan noted that while the bill claims over $1 trillion in savings, most of that is backloaded beyond the current presidential term. "Will it ever happen?" he asked, casting doubt on whether the proposed fiscal tightening will materialize. Read more: What are bonds, and how do you invest in them? The bond market's reaction to the legislation has been swift. The 30-year Treasury yield (^TYX) surged as high as 5.15% this week, marking its biggest intraday move since 2023 and approaching closing levels not seen since 2007. These moves were driven not only by renewed fiscal concerns at home but also by a weak Treasury auction and escalating fiscal turmoil in Japan. Prime Minister Shigeru Ishiba's warning on the country's finances triggered a bond sell-off and stoked global fears about waning demand for US Treasurys. "The long end of the curve, there's a tremendous amount of uncertainty," Asterozoa Capital chief investment officer Joe Hegener said on Friday, describing recent market moves as a "material risk" to stocks and the broader US economy. "We're starting to see investors get a little spooked," he continued. "What's going on in Japan and abroad is only exacerbating that risk." While short-term yields have stayed relatively anchored amid expectations that the Fed will hold interest rates steady, longer-term yields have climbed more sharply as investors demand greater compensation for mounting fiscal and policy uncertainties. Heather Boushey, who served on President Joe Biden's Council of Economic Advisors, said the recent surge in yields may signal mounting fears of stagflation and deeper economic strain. "There is not good news here," she said, adding that the bond market's message is clear: "Let's not go down this path." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at
Yahoo
23-05-2025
- Business
- Yahoo
Trump's tariffs are challenge to fostering economic growth: Expert
President Trump is now threatening a 50% tariff against the European Union (EU) — alongside a 25% tariff against iPhone maker Apple (AAPL) — outlining how trade talks with European trade officials "are going nowhere" in a post on Truth Social. Bipartisan Policy Center Director of Economic Policy Shai Akabas comes on to talk about the "unsustainable" nature of the administration's tariff policies and the effects they have on small businesses and the American consumer. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. President Donald Trump refueling trade tensions threatening to impose a 50% tariff on goods from the EU, as well as 25% tariffs on Apple's iPhones. The levies on the EU would take effect on June 1st. Trump saying in a post on Truth Social that talks are going nowhere. Then joining us now, we've got Sheik Abus who is the Director of Economic Policy at Bipartisan Policy Center. Good to have you here with us. Just take us into your reading now on the latest on some of the trade policy and I guess strategic chaos has it's been talked about by some of the administration members. Yeah, well, thanks for having me. The what we've seen in the tariff um policy over the last several months has been really driving the uncertainty in the economy. And from a business standpoint, from a consumer standpoint, and it's very understandable that there are goals that these tariffs that we have with these tariffs that we are trying to renegotiate trade deals that have been placed for many years, get more fair trading relationships. Uh we understand the administration's goals to bring back some of the uh manufacturing to the United States. Those can be accomplished in a variety of ways, but when we are seeing these fluctuations in tariff policy, it makes it impossible for small businesses, especially to plan how they're going to conduct their business. It makes it very difficult for consumers who hear that inflation might be coming and making big purchasing decisions around that. So I think it will be important for some of this uncertainty to settle down over time if we're going to see the strong robust economic growth that we all want to. Is that uncertainty going to settle down anytime soon in your view? Well, it depends on what the administration's policy is. We've seen tariff rates go up and then they come back down, and then they tariffs get put back on, and then they take taken off. And that is really challenging for to fostering growth in the economy. Uh it'll really be up to the administration and the negotiations that they are undertaking right now with many countries across the world, and we'll have to see what those tariff rates end up at. We are right now at 10% across the board and higher on China, uh Canada and Mexico, and then there are these uh potential additions that you just mentioned at the top. If those all go up, then I think we're in for a difficult second half of the year for the economy. If we settle into a more uh natural state of equilibrium, even if that includes some tariffs, I think people will feel more confident about planning for the future. I I thought the tariffs were supposed to offer the tax cut. So this is another challenge, which is that we've heard competing visions and goals for what the purposes of these tariffs are. That the president has said that he wants to bring in a massive amount of revenue from the tariffs. We've seen a little bit of revenue come in. We have a tracker that that shows that tariffs are coming in at higher rates than they were in previous years, but nothing that's going to materially change our fiscal challenge. And that is at odds with the uh purpose of the tariffs to incentivize renegotiations of the trading relationships that will result in more free trade. Because of course, if we get free your trade and tariff rates come back down, they're not going to bring in that revenue that's being discussed. So we'll have to see where those two competing priorities uh leave us, but I think the bottom line for the fiscal situation, which is getting quite dire in this country, is it's unlikely that tariffs are going to play a major role in getting us out of the situation that we've gotten ourselves into. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
Trump's tariffs are challenge to fostering economic growth: Expert
President Trump is now threatening a 50% tariff against the European Union (EU) — alongside a 25% tariff against iPhone maker Apple (AAPL) — outlining how trade talks with European trade officials "are going nowhere" in a post on Truth Social. Bipartisan Policy Center Director of Economic Policy Shai Akabas comes on to talk about the "unsustainable" nature of the administration's tariff policies and the effects they have on small businesses and the American consumer. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Yahoo
24-03-2025
- Business
- Yahoo
US government could face default risk as soon as July, analyst projects
By Richard Cowan WASHINGTON (Reuters) - The U.S. government will risk defaulting on some of its $36.6 trillion in debt sometime between mid-July and early October unless Congress acts to raise the cap on Washington's borrowing limit, the Bipartisan Policy Center think tank projected on Monday. Lawmakers have repeatedly taken negotiations over raising the government's borrowing limit to the last minute, a trend that has rattled financial markets and led the major credit agencies to lower their ratings on the federal government's creditworthiness. The brinkmanship has continued despite the fact that Congress's own decisions, both to authorize new spending and to cut taxes, have pushed the national debt higher. The non-partisan Congressional Budget Office on Wednesday will make its own projection for the so-called X-date, when the Treasury Department is no longer able to cover all of its obligations, according to a spokesperson. "Lawmakers cannot afford to delay action on the debt limit," Shai Akabas, vice president of economic policy at BPC said in a statement. 'Addressing debt limit well ahead of the X Date should rise to the top of the priority list." The U.S. has never defaulted on its debt and global financial markets become jittery if there is even a whiff of that potentially occurring. A 2023 debt ceiling showdown pushed the U.S. to the brink of default and hurt its credit rating. It is difficult to nail down a precise X-date because it depends upon several factors, including the flow of tax receipts with the mid-April deadline for Americans to file their annual tax returns. This year, several other factors will play into the deadline, including signs of a softening economy and the imposition of U.S. tariffs on foreign goods by President Donald Trump. Also, tax filing extensions to help victims of recent natural disasters are also playing into the flow of revenues into government coffers. BPC noted that while unlikely, there is the potential for an early June X-date if tax collections lag behind estimates ahead of quarterly receipts on June 15.
