GOP Megabill Could Cause Potential Cataclysm in the Bond Market

GOP Megabill and Its Impact on the Bond Market

Former White House communications director Anthony Scaramucci described President Trump’s massive tax and spending bill as a potential cataclysm for the bond market. In a Tuesday interview with CNN’s Anderson Cooper, Scaramucci expressed concerns, stating, “The bond market does not like the spending bill.” He further noted, “There’s a freight train coming in the bond market.” If rates back up 100 to 150 basis points, it could be terrible for the economy and housing.

Connection to Small Businesses

Scaramucci emphasized that small businesses are intricately linked to housing, “That’s where all the job growth is.” He warned that this bill could lead to significant turmoil, highlighting that the bond market indicates concern.

Bond Market Jitters

Bond markets have been volatile recently due to Trump’s trade war and domestic agenda. The yield on the 30-year Treasury broke 5.1% last week, trading at 4.88% Wednesday—a high like this hasn’t been seen since 2007.

Comments from JPMorgan Chase

JPMorgan Chase CEO, Jamie Dimon, acknowledged a challenging time ahead for the bond market as the GOP pushes its agenda. He stated that national debt levels are a significant concern.

Estimations from CBO

A recent estimate from the Congressional Budget Office (CBO) claimed the GOP bill would increase the national deficit by $2.4 trillion over the next decade. Despite proposed tax cuts decreasing revenues by over $3.6 trillion, accompanying measures could mitigate this by cutting federal spending by an estimated $1.2 trillion.