The financial markets are sent in Washington, DC, an urgent message: it’s time to start dealing with huge national debts.
congress replied: Nah. Instead, we will make more debts.
It seems that few people in the country’s capital notice what is happening in the bond markets, as interest rates rise in an unusual trading style. Treasury, which lasted 30 years, has been released 5.1 %, the highest level since 2007. The 10 -year treasury has been swept away, the highest level since February.
These rates are not a problem by nature on their own. However, the strange thing is that the prices offered by the dollar were rising at the same time, as investors see greater risks in the market due to the effects of President Trump’s tariff and the swollen national debt that may finally reach the origins of crises.
When investors believe that the risks are high, they usually put more money in the US cabinet leaves because of their “safe haven” situation. More demand for a cabinet pays prices down. Flap markets such as those in the past few months usually direct more money to the treasury bonds, which reduces rates.
This did not happen. Instead, rates have risen, with less money in the cabinet and some investors who sell. This has become known as the “Sell Americana” trade, a new aversion to American assets among investors who usually cannot get enough of them.
One of the operators of the Sell Americana trade is anxiety that the account for years of financial recklessness has finally reached. MOODY classification agency confirmed this on May 16 when it reduced the American credit rating, the last three main classification agencies to do so. Moody’s said that the American economy is strong, but “successive American departments and Congress have failed to agree on measures to reflect the direction of the large annual financial deficit and the increasing interest costs.”
Investors are zero in the problem. “Is the US government debt crisis imminent?” Economist Ed Yardini asked Yardini research in a recent analysis. “This is possible. Stock and bond investors may begin to finish … Federal deficit and debt.”
In this photo of the video with the total final vote, the House of Representatives approved by the House of Representatives Donald Trump, tax exemption bills and program after a session throughout the night in the Capitol building in Washington, Thursday, May 22, 2025. (House of Representatives via AP) ·Associated Press
However, instead of taking care of the lesson, Republicans who control Congress on their way to passing a tax cutting package make the problem much worse. The tax cutting bill approved by the House of Representatives on May 22 will add at least $ 3 trillion for national debt during the next decade. The largest rulings extend a series of tax cuts for individuals with expiration at the end of 2025.
The draft law is now transferred to the Senate, which can impose meaningful changes. But if there is anything, they can add to the cost of the bill. The copy of the house, for example, includes hundreds of billions of dollars in discounts to Medicaid, the poor health care program. The Senate can expand their scope, resulting in a final bill that adds more to national debt.
The total national debt is now 36 trillion dollars, with the part that the general investors maintain are equivalent to about 100 % of the US GDP. This only goes. President Trump says he wants to reduce government spending through the “Doug” efficiency committee and other efforts to reduce the size of the bureaucracy. However, Congress has been sincere on a very few “discounts” that Dogi set, which means that the money continues to get out of the door. The courts reflect many other Trump efforts, saying that the president cannot change the form of the government without supporting Congress.
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The largest escalating government debt driver is the uninterrupted growth of social security, medical care, and automatic spending programs for the elderly. These programs pay benefits for those who are eligible, regardless of the cost. The division in this spending can be risky, because it is likely that it is likely that the benefits discounts for millions as well as new taxes on some. Many easier to reduce everyone’s taxes than to impose austerity measures needed to control the federal budget.
The Trump administration indicated that it will start focusing on the deficit once the tax bill is completed and signed, perhaps by mid -summer. Treasury Secretary Scott Bessin says he wants to reduce the annual budget deficit by 3 % of GDP. It is about 6.4 % of gross domestic product now, and it will rise to at least 7 % of GDP as soon as Congress is practicing the Trump tax bill, according to the committee on the responsible federal budget. It seems that the possibility of reaching his goal disappears.
BESSENT has yet talked about obtaining more tax revenues from customs tariffs and enhancing growth through a boom in energy production as ways to improve the financial position of the nation. These are Trump’s talk points and most economists do not buy. Instead, economists expect the definitions to be growing growth while paying prices up, which risk “stagnation”. It can help low energy prices, but not if it is low because the economy stumbles.
The bond markets are the final report card on whether Trump’s economic plan is credible, and now, the degree is in the C-. High rates of borrowing costs for everyone up, which makes real estate loans and car loans more expensive. The government’s borrowing costs are also rising, which means that more taxpayers dollars should go to future benefits payments that do not provide services or benefits for Americans.
Analysts believe that the 10-year-old cabinet rate exceeds 5 %-about four tenths higher than the current levels-that will enhance the arrival of a real crisis that may force policymakers to act. “The debt crisis should not be a catastrophe if it forces Washington to put our financial policy in a reliable sustainable session,” Jardini wrote. Time may be coming for Congress to prove if he is able to do this.
Rick Newman is a big column writer Yahoo financing. Follow it Blouse and x: @Rickjnewman.
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