Fears of a global government borrowing glut — likely to be compounded by the GOP’s spending and tax cut bill — helped fuel an unusually weak auction for U.S. government bonds that sent markets into a tailspin Wednesday.
The broad S&P 500 fell 1.6%, while the Dow Jones Industrial Average declined more than 800 points, or 2%. The tech-heavy Nasdaq was off 1.4%.
Investors are increasingly worried that central banks around the world, including the U.S. Federal Reserve, will have to hold interest rates higher for longer. That scenario could help keep a lid on inflation, which can be fueled by rising levels of government spending.
It’s an issue ratings firm Moody’s highlighted Friday when it stripped America’s debt of its prime AAA status. While the market’s initial reaction to the downgrade was relatively muted, a combination of fears of rising interest rates abroad and the impact from the budget bill sought by President Donald Trump…
