U.S. stocks closed sharply lower as Treasury yields spiked, driven by fears that President Donald Trump’s proposed tax cut bill could add $3 to $5 trillion to the national debt. All major Wall Street indexes posted their biggest daily losses in a month, while the 10-year Treasury yield hit its highest level since mid-February, signaling growing investor anxiety.
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00:00The U.S. stocks closed sharply lower on Wednesday as Treasury yields spike on worries that government debt would swell by trillions of dollars if Congress passes U.S. President Donald Trump's proposed tax cut bill.
00:15All three major Wall Street indexes closed with their biggest daily losses in a month.
00:20Small cap stocks also fell sharply with Russell 2000 index recorded its biggest daily loss since April 10.
00:31Larger dated Treasury yields rose after soft demand from investors in a $16 billion sale of 20-year bonds by the Treasury Department.
00:40The yield on benchmark U.S. 10-year notes rose 11.5 basis points to 4.597%.
00:48During the session, the 10-year yield hit its highest since mid-February.
00:54Today is another wild, volatile day in the markets.
00:57Opened down, fought back, and then the major thing that happened was that interest rates went up.
01:02And so we had a 20-year auction.
01:04It did not go extremely well.
01:06It actually went pretty poorly as the last two have now.
01:09So interest rates shot up across the board.
01:12It went up over 10 basis points over the 20-year and over the 30-year yield.
01:17And that's problematic.
01:18As we get through 5%, which now we are clearly through, it tends to gum up the works in the economy in terms of consumer confidence, in terms of the stock market.
01:28And it's one of the big indicators that we're keeping an eye on right now.
01:31How much further can we go through 5% or hopefully yields a peak tier?
01:35Where do we sit?
01:37Well, we still have a tariff threat.
01:39And now we have earnings that are looking like they may roll over for next quarter if you just listen to management commentary and if you looked at guidance, which has been weaker.
01:49So, again, the market's trying to digest all of this.
01:51And the ultimate arbiter right now is the bond market and it is in bond yields.
01:57And with yields going up, that's also going to put additional pressure on the stock market.
02:01So I think that's why after this huge rally, we've kind of felt some weakness here in the past few days.
02:06A congressional committee set an unusual hearing as House Republicans sought to overcome internal divisions over proposed budget cuts, including to the Medicaid health program.
02:18Nonpartisan analysts said the Republican bill could add between US$3 trillion to US$5 trillion to the federal government's US$36.2 trillion debt.
02:28Nonpartisan analysts said the Republican bill could add between US$3 trillion to the federal government's US$3 trillion to the federal government's US$3 trillion to the federal government's US$3 trillion to the federal government's US$3 trillion.