Markets React Sharply to Fiscal Uncertainty & Rising US Debt

US government bonds and equities dropped following a weak $16B auction for 20-year Treasuries and renewed concerns over the country’s rising debt. The proposed tax bill —expected to add $3 trillion to the deficit—has intensified fiscal worries.

The 30-year Treasury yield jumped to 5.096%, the highest since 2023, while the S&P 500 fell 1.6%. Nearly all sectors declined, with financials, healthcare, and real estate hit hardest. The downgrade from Moody’s and a lack of appetite for long-duration bonds are adding pressure, while Big Tech also slid amid news of OpenAI’s $6.4B acquisition of Jony Ive’s hardware startup. Markets are signaling concern over US fiscal credibility.

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