Jun 4, 2025 3 min read

Mixed Bag

Mixed Bag
Photo by v2osk / Unsplash

The 10-year US Treasury bond yield fell to 4.36% today on a batch of weaker-than-expected economic indicators. Bond investors weren't fazed by Elon Musk's attack on President Trump's "big beautiful bill" on Tuesday afternoon. Musk thinks it’s ugly: "This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination." Nor were they fazed by the fact that the Congressional Budget Office said today that the bill (as passed by the House) could add $2.4 trillion to the federal budget deficit over the next 10 years. The Committee for a Responsible Federal Budget reiterated that the bill will more likely increase federal government debt by $3 trillion, or roughly $5 trillion if made permanent. The Trump administration counters that better-than-expected economic growth will bring in more revenues.

The bond market apparently isn't on the verge of a debt crisis, as widely feared just a few days ago. Instead, investors bought US Treasuries today in response to weaker-than-expected reports from ADP on private payrolls and ISM on nonmanufacturing business activity. Nevertheless, they didn't shake our confidence in the resilience of the economy, as we discussed again yesterday. Consider the following:

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