1. Treasury yields eased but remain high as Trump’s tax bill is assessed. 2. The proposed bill could increase the fiscal deficit by nearly $4 trillion. 3. Moody's downgraded the U.S. credit rating due to the budget deficit concerns. 4. Investors worry about inflation and bond supply because of high deficits. 5. The Supreme Court ruling may protect Federal Reserve board members from dismissal.
Increased fiscal deficit concerns could lead to higher inflation, affecting market stability. Historical examples include the post-2008 financial crisis where stimulus measures strained investor confidence.
Concerns over the U.S. fiscal situation impact investor sentiment, influencing S&P 500 confidence. Historical instances where fiscal policy shifts led to market reactions emphasize this impact.
The ramifications of rising yields and inflation can influence market dynamics over a sustained period, like during the late 1970s when inflation hurt equity markets.