- Long-term yields spiked earlier this week as traders scaled back their bets on rate cuts by the Federal Reserve and reacted to the new tax bill advanced by House Republicans. Bond vigilantes, who can bring fiscally irresponsible politicians to heel by unloading a country’s debt, may rear their head if Congress doesn’t show any appetite to bring the federal deficit under control.
Chaos in the bond market may have forced President Donald Trump to back off the reciprocal tariffs he initially unveiled on “Liberation Day” in early April. Another sell-off ensued this week as House Republicans moved forward on a “big, beautiful” bill of tax cuts, which would likely exacerbate an already ballooning deficit.
