US Treasury Yields Surge Amid Fiscal Deficit Fears

사진/연합뉴스

The yield on the 30-year US Treasury bond soared past 5% on Wednesday, as market concerns over the United States' fiscal deficit mounted. The surge in yields came amid fears that President Donald Trump's proposed tax cuts could significantly widen the federal deficit, creating a sell-off in the Treasury market.

According to TradeWeb, the 30-year Treasury yield climbed to 5.09% at the close of the New York stock market, marking its highest level since November 2023. The benchmark 10-year Treasury yield also rose to 4.60%, as investors reacted to the potential economic implications of the tax cut bill, known as the "One Beautiful Bill," which is being pushed through Congress by Republican leaders.

The Congressional Joint Committee on Taxation has estimated that the bill, which aims to extend and expand Trump's previous tax cuts, could increase the federal deficit by more than $2.5 trillion over the next decade. This has intensified concerns following Moody's recent downgrade of the US sovereign credit rating from 'Aaa' to 'Aa1', citing rising government debt and declining fiscal revenue.

The US Treasury's recent auction of 20-year bonds further highlighted market jitters, with the bid-to-cover ratio falling below recent averages. Despite this, foreign investment demand remained relatively stable, with indirect bidding slightly down from the previous month.

Market analysts suggest that the current sell-off in long-term US Treasuries may persist, as the global perception of the dollar and US bonds continues to evolve. With rising yields in other regions like Japan and the Eurozone, the allure of US Treasuries as a safe investment is being challenged.

The increase in yields has been linked to President Trump's decision to pause the implementation of mutual tariffs, as the bond market appears to be engaging in a tug-of-war with the administration over fiscal policies. Analysts like Tom DiGaloma from Mischler Financial Group note that the enduring fiscal deficit remains a significant concern, as the market seeks clarity on whether the government can address its growing debt burden.