US Bond Yields Surge Following Credit Downgrade and Trump Tax Proposal:

Suspense crime, Digital Desk : In the wake of ex-President Trump’s new fiscal strategies, the former president’s credit rating has faced downgrading concerns. Over the weekend, Trump held a disputed Tax and Budget meeting which resulted in drastic tax cuts, alongside the United States Medal of Freedom being offered to him on the condition that he made changes to the bill they couldn’t bypass.

Long term borrowing costs surged to the $5 trillion mark, alongside taking the 30 year bonds past the 5% mark along with closing at 4.91% on Monday. That's an all-time high since 2023. This didn’t sit well amongst investors as these changes would increase debt at a dangerous rate.

Post meeting, President Trump came out on social media and stated, “This is THE ONE, BIG BEAUTIFUL BILL.”

As per economists, this new change is predicted to take the national savings down to up to $6.5 trillion, causing a risk to surpass 6.4% in GDP spending rate within the next decade if further expenses are made to the debt. With the first goal already set at 2024, this would risk inflation underneath the treasury issuing zone.

Moody’s along with Congress have already criticized USA for its decisions around borrowing wage cuts and drive spent wages, marking it challenging for the government to manage expenditure freely which comes with taking down and increasing the budget severely грамад

The new proposed changes have caused debt ballooning concerns among analysts marking this worrisome after the cut spending limit wasalready tightened by $5.2 million dollars.

Moody’s Bond Market Downgrade News Report

The cut from Moody’s credit downgrade placed the US into a lower tier than the exclusive tri-A rated nations. In addition, the cuts included slashes to the risk ratings of the US’s prime financial institutions such as JPMorgan Chase, Bank of America, State Street and Wells Fargo.

Axa Investment Managers’ Nicolas Trindade pointed out that JPMorgan and other banks will now have to work harder to regain investors trust. The large treasury market’s size and liquidity will likely prevent a massive sell-off of US treasuries, allowing some degree of stability in volatile conditions.

Wider Investor Issues Go Beyond Ratings

While broad distrust of US financial capabilities combined with Moody’s rate downgrade has severely impacted investor confidence, ongoing inflation and undisclosed fiscal policies added to the market’s negative perception.

BNP Paribas’ Wei Li stressed that the precedence of large underlying issues, like tariffs on US allies and increasing inflation, shape yield movements net of expected value of returns, irrespective of criticism.

Weak equity markets displayed little movement despite soaring bond yields due to a hefty 0.7% loss of value against the US’s major global allies.

Tax cuts, mounting debt, and inflation control continue to be a major focus for the investors as US legislators in Washington try to reach a fiscal consensus. The coming weeks will be a true litmus test for the trust in the US economy.