{"id":1537885,"date":"2025-05-24T15:40:00","date_gmt":"2025-05-24T19:40:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1537885"},"modified":"2025-05-24T15:40:00","modified_gmt":"2025-05-24T19:40:00","slug":"big-beautiful-bill-meets-big-ugly-bond-market","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/big-beautiful-bill-meets-big-ugly-bond-market\/1537885\/","title":{"rendered":"Big, Beautiful Bill Meets Big, Ugly Bond Market"},"content":{"rendered":"

Big, Beautiful Bill Meets Big, Ugly Bond Market<\/span><\/p>\n

\n

Submitted by QTR’s Fringe Finance<\/a><\/em><\/p>\n

One of the reasons many people voted for President Trump during this past election was the Republican Party’s focus on our nation’s out-of-control finances.<\/p>\n

After four years of what can only be described as the Biden administration purposefully racking up as much debt as humanly possible\u2014while not even telegraphing a\u00a0semblance<\/em>\u00a0of fiscal responsibility\u2014the Trump administration ran on a plan to drastically cut spending and inject some financial common sense into government.<\/p>\n

So far, there\u2019s been some tangible progress. Trump is trying to recalibrate global trade in order to bring in new revenue and narrow our trade deficit. DOGE has worked to try and cut wasteful government spending. And there have been more discussions about sound money and methods to try and address the nation’s debt in the Trump administration\u2019s first few weeks than I heard during all four years of the Biden administration.<\/p>\n

But now we\u2019re staring down the face of a tax and spending package bill, referred to as the \u201cOne Big Beautiful Bill”, that\u2019s dividing parts of the GOP.<\/p>\n

<\/a><\/p>\n

Trump is advocating for his new bill because he believes it will stimulate economic growth, reinforce U.S. infrastructure and industry, and strengthen national security\u2014all while projecting confidence in America’s financial future. He argues that targeted spending now can generate long-term returns through job creation, increased productivity, and global competitiveness. By pushing this bill, he\u2019s aiming to balance fiscal responsibility with strategic investment, positioning it as a necessary step to rebuild the country\u2019s foundations after what he portrays as years of neglect and mismanagement under the previous administration.<\/p>\n

GOP opponents of Trump\u2019s new spending bill argue that it adds too much to the national debt and doesn\u2019t include enough spending cuts to balance it out. They\u2019re concerned it could worsen inflation and say the government is trying to take on too much instead of leaving things to the states or private sector. Some also believe the bill is filled with unnecessary items and lacks clear focus. Overall, they see it as fiscally irresponsible and a step away from conservative principles of limited government and careful budgeting.<\/p>\n

Last night Rep. Thomas Massie (R-KY) opposed Trump\u2019s bill, calling it fiscally reckless due to its mix of tax cuts and increased spending. He warned it would add trillions to the debt and criticized the rushed vote on a still-unfinished bill. Despite pressure from GOP leaders and Trump, Massie voted no, underscoring deep divisions in the party over fiscal policy.<\/p>\n

Massie correctly pointed out that investors continue to demand higher yields on U.S. bonds, signaling a loss of faith in the creditworthiness of the United States.<\/p>\n<\/p>\n

Massie is unique as a Republican because of his willingness to stand up to the MAGA machine and stand on principle. He\u2019s also unique as a member of Congress in the sense that he\u2019s probably one of about a half dozen people\u2014out of the hundreds in Congress\u2014who actually\u00a0understand the bond market<\/em>. And his concern early this morning, whether it\u2019s taken seriously by President Trump\u2019s administration or the rest of Congress or not, is warranted.<\/p>\n

For lack of more complicated jargon, the bond market has recently been \u201cout of whack\u201d. Yields are rising despite the Federal Reserve being in the middle of a cutting cycle, and bonds sold off at the same time risk assets sold off after Liberation Day (they would usually catch a bid in a \u2018flight to safety\u2019 selloff). If it feels like the magnetic poles of the bond market have reversed, it could be because they have.<\/p>\n

What does this mean?<\/p>\n

The bond market has traditionally been comprised of far more sophisticated and sizable investors than the equity market: foreign governments, giant institutions, and extremely wealthy investors, to name a few.<\/p>\n

As bonds sell off with risk assets and as yields rise despite the Fed cutting rates, these influential and sizable investing world powers that be are sending the message that\u00a0things are not OK the way they are going.<\/em>\u00a0The rising yield indicates a desire to be compensated more for holding U.S. debt\u2014sending the signal that it is riskier than people think it is\u2014and it also sends a message to our Treasury and the Federal Reserve that the country\u2019s fiscal house is not in order.<\/p>\n

\ud83d\udd25 80% OFF | MEMORIAL DAY WEEKEND ONLY:<\/strong>\u00a0For the long weekend I am bringing back my largest ever discount on\u00a0Fringe Finance<\/em>\u00a0annual plans. Until the end of Monday, you can get 80% off an annual subscription \u2014 a discount you keep for\u00a0as long as you wish to remain a subscriber.\u00a0<\/em>This matches the largest discount I have ever offered to subscribe:\u00a0Get 80% off forever<\/a><\/strong><\/p>\n

The bond market is, in essence, a collection of investors so sharp that\u00a0they can\u2019t help but realiz<\/em>e exactly how precarious the country\u2019s financial situation has gotten, no matter how much of a polish or gloss politicians and government officials try to put on it. In other words, the bond market can\u2019t be fooled\u2014and by the looks of it, isn\u2019t.<\/p>\n

And no matter what side of the argument you\u2019re on for Trump\u2019s big, beautiful bill, there\u2019s no doubt that the bond market is going to settle this dispute. If the bill passes and bond yields continue to rise, it will continue to tighten the fiscal screws for the United States.<\/p>\n

The bond market blowing up has no silver lining either. As yields rise, so will the amount of interest we pay on the national debt, and it\u2019ll publicly broadcast a lack of confidence in U.S. paper. And if the likely scenario occurs where the Fed somehow steps in with printed money and utilizes big banks to steady the Treasury market (sometimes called yield curve control, or a version of it)\u2014that could thrust the United States further down the stagflationary path it\u2019s already on.<\/p>\n

The one solution has always been very simple: spend less while keeping revenue the same, increase revenue while spending the same, or increase revenue and spend less at the same time. One way or another, the deficit has to be addressed\u2014and the time for doing it is\u00a0right now<\/em>\u00a0\u2014 not five years from now, not ten years from now, not at any other point in the future.<\/p>\n

The bond market knows this and has been sending this signal clearly since early April.<\/p>\n

MAGA supporters can channel all the hate they want at the libertarian Republicans in Congress, just as Republican hardliners can lash out at what they believe to be more irresponsible spending. But the only true adjudication of this debate the country is having is going to come from the bond market.<\/p>\n

If you\u2019re not already, it\u2019s time to watch very closely.<\/p>\n

<\/a><\/p>\n

QTR\u2019s Disclaimer<\/strong><\/em>:<\/strong>\u00a0Please read my full legal disclaimer\u00a0on my About page here<\/a><\/em>.\u00a0This post represents my opinions only.<\/em>\u00a0In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a\u00a0Creative Commons license<\/a>\u00a0with my best effort to uphold what the license asks, or with the permission of the author.<\/em><\/p>\n

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade\/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I\u2019m bullish without owning things, sometimes I\u2019m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I\u2019m long I could quickly be short and vice versa. I won\u2019t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can\u2019t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I\u2019m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it\u2019s that important.<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 05\/24\/2025 – 11:40<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/big-beautiful-bill-meets-big-ugly-bond-market<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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