FX.co ★ US Treasury Yields Rise Amid Fiscal Concerns

Treasury yields in the U.S. surged on Monday, with the 10-year note rising to approximately 4.55%, its highest since mid-February, while the 30-year yield exceeded 5% for the first time since April, marking its peak since October 2023. These increases reflect heightened concerns regarding the U.S. fiscal outlook following Moody’s decision to downgrade the nation's credit rating from Aaa to Aa1, driven by rising government debt and a widening budget deficit. Further compounding fiscal anxieties, President Trump's recent tax-cut proposal, involving substantial unfunded tax reductions, gained approval from a key congressional committee over the weekend. The Trump administration argues that the tax cuts will boost economic growth, enhance government revenues, and eventually decrease the deficit. In monetary policy, markets are still forecasting two interest rate reductions from the Federal Reserve within the year, anticipated in September and December.