US Treasuries experienced a downturn on Wednesday (Thursday AEST) as investors braced for a crucial US jobs report. This decline coincided with renewed fiscal anxieties that triggered a sell-off in the UK bond market, further impacting global markets. US government debt saw a decrease across the yield curve, with the 30-year Treasury yield rising by approximately five basis points to 4.81 per cent. This movement was partly influenced by events in the UK, where yields on 30-year gilts increased due to concerns surrounding Chancellor of the Exchequer Rachel Reeves and renewed questions about the nation’s fiscal stability.
Similar apprehensions regarding the fiscal outlook are present in the US. The Senate recently approved President Donald Trump’s comprehensive tax and spending bill, projected to increase the national debt by an estimated $US3.4 trillion over the next decade. The legislation is now under consideration by the House, as Republicans aim to finalise it by President Trump’s July 4 deadline.
Zachary Griffiths, head of investment-grade and macroeconomic strategy at CreditSights, noted that investors are already factoring in the potential impact of the bill. He stated that expectations of increased supply from the US, combined with broader fiscal concerns worldwide, including in the UK, are contributing to market uncertainty. These factors are collectively influencing investor sentiment and market dynamics.
