U.S. Treasury note yields backed off from their highs after the House passed a tax bill that is worrying markets because of its high cost.
The 30-year Treasury yield shed 4 basis points to 5.052%. It had earlier in the morning topped 5.14%, its highest level since October 2023. The 10-year Treasury yield was down nearly 6 basis points at 4.541%. The 2-year Treasury yield was lower by 2 basis points at 3.994%.
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WATCH HEREOne basis point is equivalent to 0.01% and yields move inversely to prices.
The U.S. budget deficit has become a worry for bond investors since Moody's downgraded the country's credit rating at the end of last week and as the GOP haggled over the details of President Donald Trump's massive budget bill this week.
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SIGN UP The House advanced the bill to the Senate early Thursday. Trump's "big beautiful bill," containing tax cuts along with additional spending on the military, will add nearly $4 trillion to the deficit, according to the Congressional Budget Office.
Investors fear the bill could put additional pressure on bonds that are already falling because of concern Trump's tariffs is adding to inflation.
"Longer term, yeah, it blows out the deficit. Long term, for the bad market, it's bad news. Yields are going higher, which means prices are going down because Treasuries are becoming incrementally less appealing and trustworthy, as our budget deficit stays extremely high for a very long period of time with no signs of it going back to normal," said Jed Ellerbroek, portfolio manager at Argent Capital Management, in an interview with CNBC.
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The 30-year Treasury yield ended last week around 4.9%. In April, the yield hit as low as 4.29%. But this week rates have surged, with the biggest move higher coming on Wednesday.
A poor 20-year Treasury auction on Wednesday helped fuel the yield increase, showing lagging appetite for investors to keep funding the U.S. deficit, especially with it set to get bigger from the proposed tax bill.
As the U.S. issues more debt to pay for the bill, the increased supply could weigh on prices and further raise yields.
