Trump's youngest Wall Street Showdown press the investor skepticism into the edge | Trump -Zölle

Donald Trump calls his tax and expenditure plans “big, beautiful” and a unique opportunity to strengthen the prosperity of the US economy. The bond market disagrees.

In its latest showdown with Wall Street, after the Turbum announcement was triggered last month in the past month, the global financial markets are again folded by the one Big Beautiful Bill Act by the US President. Plans to achieve the EU with 50% tariffs for all imports contribute to the headache pain.

With regard to the growing discomfort, the return on the interest rate of 30-year-old bonds of the US government has increased over 5%and threatens to achieve the highest level for 18 years. In the meantime, Moody's, a leading loan rating agency that rely on large investors, has robbed the USA from the first-class Triple-A score last week.

Graphics shows a strong increase in 30-year-old US government bond income

At the center of the concern is the so-called “double-deficit position” of the USA and a simultaneous budget deficit (if public expenditure exceeds the income) and trade deficit (if imports exceeds exports)-and concern that Trump's politics will see the inflation and sink the US economy into a recession.

Mark Dowding, the Chief Investment Officer of RBC Bluebay Asset Management, a hedge fund, said that despite the growing discomfort of investors, the president seemed satisfied with “keeping calm and keeping up” – which could further test the markets.

“Laffer Curve Economics Inspired Thinking in the United States is countered by investors for bond market increased skepticism that deals with an alarming increase in debt processes,” he said. “Essentially, Washington has thrown the glove on the bond market.”

According to the One Big Beautiful Bill Act, trillion of tax cuts that Trump introduced for the first time 2017 – but triggered it to the end of 2025, and is compensated for by controversial cuts in some areas of expenses, including medicaid, the health scheme for those on low income.

The non-partisan committee for responsible federal budget estimates The measures will increase the annual deficits of the US deficits to 2.9 m (2.1 TN) (6.9% of the US BIP) by 2034 or 3.3 TN (7.8% of GDP) if time-resolution guidelines are made permanently.

The execution of this major annual deficits will contribute to the America's outstanding debt stacks, which in 2024 was 28.2 TN (97.8% of GDP) at 28.2 TN and was already on the right track to reach almost $ 50 by 2034 (117% of GDP).

Trump's measures could, however, add a further 3.33 US dollars to 125%or 5.2 participants by 2034 if they are made permanently (129%).

Graphics shows how the US state debt is expected to achieve 125% of GDP by 2034

Economists argue about the dangers of high level of debt. Several countries have debt rates over 100%, including Japan, with more than 260%, and there is no precise, agreed danger zone. In contrast to households, governments have the authorization to print currencies, to change tax and expenditure plans and to determine laws. Comparisons with a family credit card that is maximized are meaningless. Borrowing can help governments if the proceeds are based on the basis for stronger economic growth in the future.

Persistent deficits and constantly increasing debt levels can, however, undermine the trust of investors in the ability of a country to work on the iOUS. This can further increase the credit costs because investors are demanding higher premiums. Higher interest rates increase the invoices for fault services, while high debt companies can “displace” productive private investments in favor of cash in state bonds.

For decades, the United States has been enjoying cheaper credit costs compared to many other countries, especially in view of the extent of its annual deficits and the enormous pending debt, which Washington was known as a “exorbitant privilege”.

However, investors warn the patience because Trump's increasingly unpredictable politicians are the post -war consensus that the purchase of assets is the purchase of assets, the safest place where they can use their money.

Trump could argue that his collective bargaining policy will achieve income to compensate for the costs of tax cuts and that its huge giveaways could stimulate expenses in the economy by putting more money in the pockets of companies and consumers.

However, the non-partisan tax foundation tank believes that today's US tariffs could increase $ 2.1 TN US dollars between 2025 and 2034, but would reduce long-term GDP by 0.6% in the same period before the retaliation measures are taken into account.

“The concerns about the loan in us do not go away. And for all the fear of tax and expenditure calculation, irony will hardly lead to the economic growth rates in the next few years,” wrote the analysts of the ING Bank in a reference to customers.

On the other hand, the Thinktank also says that Trump's tax cuts could increase long-term GDP by 0.6%, but would cost 4.1 $ in forge income in the same period.

While there are complaints on the bond market, there are also consequences for the world in general. This is because the US bond market acts as a critical point of reference for other securities around the world, which means that the increasing US credit costs will pull other state interest rates higher.

In the UK, the 30-year bond income has reached the highest since the end of the nineties and increased the complications for the British Chancellor Rachel Reeves by increasing the costs of debt calculation.

The loan costs are increasing in Japan, in view of the inflation concerns and the country's central bank, loose monetary policy for years. As the largest foreign owner of US state bonds, investors can draw money from the US market in favor of increasing returns for domestic bonds.

After rapid growth of state debts worldwide – according to the economic shocks of the 2008 financial crisis, the Covid pandemic and now Trump's trade wars have increased – the challenges are increasing.