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The Guardian: Trump's latest Wall Street showdown pushes investor skepticism to the brink
The Guardian - Trump’s latest Wall Street showdown pushes investor skepticism to the brink
US president’s One Big Beautiful Bill Act has rattled the bond market and will invariably have global consequences
Richard Partington
Senior economics correspondent
Sat 24 May 2025 07.00 EDT
Donald Trump calls his tax and spending plans “big, beautiful,” and a once-in-a generation opportunity to bolster the prosperity of the US economy. The bond market disagrees.
In his latest showdown with Wall Street, after the turmoil unleashed by his “liberation day” tariff announcement last month, global financial markets are rattled again, this time by the US president’s One Big Beautiful Bill Act. Plans to hit the EU with 50% tariffs on all imports are adding to the investor headache.
Reflecting growing unease, the yield – in effect the interest rate – on 30-year US government bonds has risen above 5%, and is threatening to reach the highest level in 18 years. Meanwhile Moody’s, a leading credit ratings’ agency, relied on by big investors, last week stripped the US of its top-notch triple-A score.
Central to the concern is the US’s so-called “twin deficit” position – running a simultaneous budget deficit (when public spending exceeds revenues) and trade deficit (when imports outstrip exports) – and the worry that Trump’s policies will stoke inflation and sink the US economy into recession.
/snip
US president’s One Big Beautiful Bill Act has rattled the bond market and will invariably have global consequences
Richard Partington
Senior economics correspondent
Sat 24 May 2025 07.00 EDT
Donald Trump calls his tax and spending plans “big, beautiful,” and a once-in-a generation opportunity to bolster the prosperity of the US economy. The bond market disagrees.
In his latest showdown with Wall Street, after the turmoil unleashed by his “liberation day” tariff announcement last month, global financial markets are rattled again, this time by the US president’s One Big Beautiful Bill Act. Plans to hit the EU with 50% tariffs on all imports are adding to the investor headache.
Reflecting growing unease, the yield – in effect the interest rate – on 30-year US government bonds has risen above 5%, and is threatening to reach the highest level in 18 years. Meanwhile Moody’s, a leading credit ratings’ agency, relied on by big investors, last week stripped the US of its top-notch triple-A score.
Central to the concern is the US’s so-called “twin deficit” position – running a simultaneous budget deficit (when public spending exceeds revenues) and trade deficit (when imports outstrip exports) – and the worry that Trump’s policies will stoke inflation and sink the US economy into recession.
/snip
3 replies
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