Donald Trump’s “Big, Beautiful Bill” of tax and spending cuts passed through the House early this morning, despite the government’s auction of 20-year bonds the previous day causing yields to leap. This response from bond vigilantes has rumbled on into today, much like when, in the aftermath of “Liberation Day”, investors dumped US Treasury paper until Trump backed down and suspended his tariffs.
This is to say that if the government continues to spend on credit, and offers no clear path for arresting the growth of its debt, investors will demand ever higher interest rates on the money they lend to it. That could risk locking in a spiral of rising debt costs which ultimately chokes off the economy. It’s no wonder the US stock market is floundering, as its own investors question what the country’s growth prospects will be amid this kind of impasse.
As the largest and most liquid market in…
