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Business leaders are cheering efforts to advance President Trump’s tax cuts, but Wall Street is tempering celebrations, as investors wring their hands over rising debt and spiking bond yields.
Stocks saw a major selloff at midweek, and the Dow Jones Industrial Average slipped into negative territory upon opening Thursday — even as Mr. Trump and his allies praised the House passage of his “big, beautiful bill,” saying it will spur economic growth.
Traders are worried about a spike in Treasury bond yields that recently topped 5.1%, the highest level since October 2023.
Investors are demanding higher yields on Treasury bonds — typically a safe bet — because they see higher risk in lending to the U.S. given trade uncertainty, a recent credit downgrade and concerns about higher deficits under the GOP bill.
Moody’s recently downgraded the U.S.’s credit rating from Aaa to Aa1, citing growing federal interest payments and rising debt from high federal spending and lower revenues from tax cuts.
“Congress can do funny math, fantasy math if it wants. But bond investors don’t, and this week they sent us a message,” Rep. Thomas Massie, a Kentucky Republican who rejected the GOP bill, said in a floor speech. “Moody’s downgraded our credit rating, and the bond investors who buy our debt and finance our debt demanded higher interest rates on the 10-year note, the 20-year note and the 30-year note.”
SEE ALSO: House passes Trump agenda bill, sending massive tax and spending cut package to the Senate
The GOP-controlled House early Thursday passed the bill containing sweeping tax and spending cuts, funding for border security and national defense and policy changes designed to spur American energy production.
The Congressional Budget Office estimates the GOP tax-and-spending bill would add $3.8 trillion to the deficit over 10 years, which most Republicans argue significantly undercounts the economic growth it will spur from tax cuts and regulatory rollbacks.
Two Republicans voted against the bill — Mr. Massie and Rep. Warren Davidson of Ohio. Rep. Andy Harris, Maryland Republican, voted “present.” All three were concerned about the measure’s impact on the deficit, with Mr. Massie panning it as a “debt bomb ticking.”
Mr. Massie said American families will be saddled in the coming year by sky-high interest payments on the U.S. debt.
“We’re not rearranging deck chairs on the Titanic,” he said. “We’re putting coal in the boiler and setting course for the iceberg.”
He later posted a screenshot on X of bond yields rising, posting: “Bond markets are already demanding higher returns because Congress isn’t serious.”
The White House Council of Economic Advisors says naysayers are ignoring the positive economic impacts of tax cuts, deregulation and other parts of the Trump agenda.
The council is projecting the bill will generate 3% economic growth, which would lead to $4 trillion in additional revenue that would ultimately pay for the deficit spending.
“It’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE!” Mr. Trump posted Thursday on Truth Social. “There is no time to waste.”
• Lindsey McPherson contributed to this report.
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