U.S. Treasury Yields Ease Slightly After Tax-Cut Bill Passage, But Caution Remains

U.S. Treasury Yields Ease Following House Approval of Trump’s Tax-Cut Bill

U.S. Treasury yields softened on Friday, led by declines in long-term government bonds after the House of Representatives approved President Trump’s tax-cut bill. The 2-year Treasury yield edged down slightly to 3.985%, while the 10-year yield dropped by 2.4 basis points to 4.528%, and the 30-year yield fell 2.6 basis points to 5.038%.

This movement comes amid cautious optimism as investors digest the potential fiscal implications of the new legislation. The tax-cut bill, which aims to provide significant relief to taxpayers, has raised concerns about widening budget deficits and its long-term effects on government debt. Analysts, including those from Commerzbank Research, advise prudence, warning that despite the current yield decline, uncertainty remains over how the bill will influence the bond market dynamics going forward.

Investors are closely watching whether the bill could lead to a selloff similar to past events like the "Liz Truss moment" in the UK, where political fiscal plans triggered a sharp rise in yields. For now, the Treasury market shows a modest pullback, but market participants remain alert to future developments.