Latest news with #USDeficit
Bloomberg
3 days ago
- Business
- Bloomberg
US Deficit Is a ‘Ticking Time Bomb,' Citadel Securities President Says
By and Bernard Goyder Save Citadel Securities President Jim Esposito said the US deficit and mounting government debt levels are a 'ticking time bomb,' adding his voice to the chorus of financial executives soundings warnings about America's deteriorating fiscal outlook. Esposito, who joined Citadel Securities from Goldman Sachs Group Inc. last year, said how President Donald Trump's administration responds to the situation will be 'super important.'
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
22-05-2025
- Business
- Yahoo
US stocks end mostly flat as Treasury yields ease
STORY: U.S. stocks closed a choppy session little changed on Thursday, with the Dow and S&P 500 ending flat, while the Nasdaq edged up about a quarter of a percent. Recent concerns about the U.S. deficit have pushed Treasury yields higher and pressured stocks. U.S. President Donald Trump's tax and spending bill exacerbated those fears, as it could saddle the country with trillions of dollars more in debt. But yields moved lower after the House of Representatives passed the measure, helping stocks erase early losses. Rob Sluymer is technical strategist at RBC Wealth Management. "So technically, at least in the short term, interest rates are overbought, bond prices are oversold, and we're starting to get that near-term reversal. It's way too early at this point to conclude that we're still not going to see higher rates. But the fact that [that was] the reaction to the bill this morning, I think is a very encouraging sign." Stocks on the move Thursday included Snowflake, which jumped more than 13% after the cloud computing firm raised its fiscal 2026 product revenue forecast. While Deckers Outdoor, maker of UGG boots, which climbed more than 2% at the close, plunged more than 15% in extended trading after the company said it was scrapping its annual forecast on tariff worries. And shares of Ross Stores fell sharply in extended trading after it, too, withdrew its fiscal 2025 forecasts and said tariffs could take a toll on its profitability this year.
Bloomberg
22-05-2025
- Business
- Bloomberg
Bond Market Investors Push Back on Trump's Tax-Cut Plan
Treasuries steadied in the Asian trading day following a selloff over concerns that a proposed US tax-cut bill might enlarge the country's deficit. But with the dollar edging down for a fourth session, gold gaining and the yield on the 30-year US sovereign bond staying above the crucial 5% mark, the mood remains wary. Bond market sentiment, which took a hit after Moody's stripped the US of its top credit grade late last week, deteriorated following a $16 billion Treasury sale that drew surprisingly tepid demand. Traders have been piling into bets that long-term bond yields would surge on concerns over the US's swelling debt and deficits. The market's message has been that unless America gets its finances in order, the perceived risks of lending to the government will rise. Now, Japan seems to be drawing similar warnings after investors shunned an auction of its bonds, and yields soared. JPMorgan Chase chief Jamie Dimon won't rule out the US economy falling into stagflation as the country faces huge risks from both geopolitics, deficits and price pressures. 'I don't agree that we're in a sweet spot,' he told Bloomberg Television. Fed officials have held interest rates steady this year amid a solid economic backdrop and uncertainty about government policy changes — like tariffs — and their potential impact on the economy. Dimon also said the firm is committed to long-term investments in China, despite tensions between the two biggest economies.
