- The U.S. debt-and-deficit situation is bad and facing real prospects of getting worse. Whether the recoil in financial markets continues is largely in the hands of policymakers.
- What it’s meant in market terms has been a severe leg up in Treasury yields and a sell-off in stocks.
- “I feel like the dam is finally starting to break a little bit, and there’s too many holes in the dike to put our fingers in,” said Mitch Goldberg, president of ClientFirst Strategy.
The U.S. debt-and-deficit situation is bad and facing real prospects of getting worse, triggering a high-profile credit rating downgrade from Moody’s and another selling stampede in stocks and bonds.
Whether the recoil in financial markets continues is largely in the hands of policymakers who seem intent on adding to the U.S. fiscal problems in the name of stimulating growth through President Donald Trump’s “big, beautiful” spending bill.
For now, Wall Street experts are not optimistic about what happens from here.
“Moody’s didn’t tell us anything we didn’t already know, but they did underscore that things aren’t going in the right direction,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “The ‘big, beautiful bill’ also, when it comes to debt and deficits, is not going in the right direction.”
The result, Jones said, is that the U.S. is likely to add to its $36.2 trillion debt load, of which $28.9 trillion is directly held by the public. Tax cuts that aren’t matched with less spending would also pressure the budget deficit, which is heading toward 7% of gross domestic product.
Source: https://www.cnbc.com/2025/05/21/republican-spending-bill-driving-up-yields-and-creating-a-major-headache.html