Investors are sending strong signals of concern to Congress this week as Republicans negotiate a tax bill that would significantly increase federal deficits. The market response has been evident in the surging long-term costs of financing the national debt, marking a notable shift in investor sentiment toward U.S. Treasury debt.
The immediate catalyst for market anxiety was a credit downgrade by Moody’s of the U.S. government’s borrower status, a move that had been previously signaled in 2023. While this downgrade didn’t reveal new information to bond investors, it served to concentrate attention on the growing debt concerns.
