The Bond Investors Threatening Trump’s ‘Big, Beautiful’ Tax Bill
How “bond vigilantes” — who collectively act out of self-interest — keep governments in check.
If President Donald Trump’s “big, beautiful” tax bill becomes law, the US national debt is expected to spike by trillions of dollars. As the bill inches towards a vote in Congress, investors in US debt refuse to be left holding the bag.
On May 16, Moody’s Ratings lowered its credit score on the US government, citing the country’s long streak of gargantuan annual budget deficits and “current fiscal proposals under consideration.” Investors were already nervous about the president’s bill; the rating decision confirmed their fears. When markets reopened three days later, they sold off enough long-dated Treasury bonds to drive up the yields — the return investors can expect for lending money to a government – to the highest level since November 2023.