Markets fear the bill will bake in elevated deficits and rising debt piles over the remainder of the administration's term at least. The proposed legislation lifts the $36.2 trillion debt mountain by another $3.8 trillion over the next decade, according to the nonpartisan Congressional Budget Office.
Lawmakers were due to vote again to pass the measure later today and send it on to the Republican-led Senate, which could take weeks to act. And it was not yet clear whether House Speaker Mike Johnson would secure the necessary support from his own narrow 220-212 seat Republican majority.
But bond markets are getting restive, as the poor 20-year auction displayed. The U.S. 30-year yield reached 5.108%, its highest since October 2023, and the 20-year yield hit 5.126%, its highest since November 2023.
The 30-year 'long bond' yield is now just 7 basis points from 2023's peaks. A break above that would put it at its highest since the 2007 banking crash unfolded - a shock which forced the Federal Reserve to spend years in bond buying support.
Trouble at the long end of the Treasury market was reflected in government bond markets around the world, with Japan still grappling with surging ultra-long yields to record levels too and Britain's 30-year yield hitting its highest since April's volatility.
Bank of Japan board member Asahi Noguchi said on Thursday he saw no need for the central bank to intervene in the bond market to stem recent sharp rises in super-long yields, describing the moves as "rapid but not abnormal".
Compounded by aggravated inflation readings and tariff-related price concerns, the debt worries unnerved stock markets again too. Wall Street stock indexes fell back more than 1% on Wednesday and markets in Asia and Europe were all lower earlier today.
There was some respite from crude oil prices, however. U.S. benchmark retreated 1% after a report that OPEC+ is discussing a production increase for July, stoking speculation that global supply could exceed demand growth.
The dollar got a modest lift meantime as signals from the G7 finance chiefs in Canada suggested Washington held back from demanding a higher yen in bilateral trade talks with Japan, as some pre-meeting speculation had fretted about.
U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato issued a statement on Wednesday that the dollar-yen exchange rate currently reflects fundamentals, a rare and explicit statement on the prevailing market situation.
Bessent and Kato "reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals", the Treasury Department said in a statement.
The somewhat contradictory statement also said that they did not discuss foreign exchange levels.
On Wednesday, South Korea's won rose sharply against the dollar after a media report that Washington had demanded that Seoul come up with measures to boost the won as part of any trade deal. The won gave up most of those gains today, however.
Elsewhere, attention was on worldwide business surveys for May. Composite readings for euro zone and Japanese firms showed activity there unexpectedly slipping back into contractionary mode this month, due largely to fresh weakness among service sector companies.
U.S. equivalents are due out later, along with weekly jobless numbers.
Today's column looks at potential rumblings in U.S. government debt markets from the perspective of domestic U.S. corporate demand for credit going forward.
