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Analysis: US Treasury Secretary's Remarks Offset Trump's Efforts to Lower US Bond Yields

Treasury yields held near uncomfortable highs on Friday as financial markets reacted to President Donald Trump’s new tax legislation and what it might do to America’s growing deficit. Investors pulled back, unsure whether US government bonds were still worth trusting. That skepticism spread fast after the House approved Trump’s tax bill on Thursday, a proposal that could add almost $4 trillion to the national debt. The Senate hasn’t voted yet, but traders didn’t wait to panic. At 4:56 a.m. ET, the 30-year Treasury yield dropped a little over 3 basis points, settling at 5.025%. The 10-year also moved down 3 basis points to 4.518%, while the 2-year nudged lower by 2 basis points to 3.986%. Traders understand those changes are minor. The deeper concern is why the yields are still stuck at these levels—and whether the US can be trusted to manage its debt. The whole thing got worse after Moody’s downgraded the US credit rating by one level last Friday. They blamed it on the exploding budget deficit and rising costs of borrowing. That rating now sits one step below the top tier. Moody’s didn’t say a default is coming—but they didn’t rule out financial pain, either. Thierry Wizman, who leads global rates and currencies at Macquarie, explained the math. “Even if the inability to reduce the deficit in the US doesn’t lead to default, a large deficit still implies greater bond supply, and perhaps eventual inflation as the debt is monetized to avoid default,” Wizman said . “Either way, it makes nominal fixed-income instruments less attractive as long-term investments.” So yeah, not many folks want to sit on Treasury bonds for the next 10 years right now. Meanwhile, a legal decision on Thursday gave the Federal Reserve some breathing room. The Supreme Court suggested that the central bank’s board members—including Chair Jerome Powell—can’t be casually removed by Trump. That helped cool off fears that Trump would fire Powell for not cutting rates fast enough. Investors were also waiting for more economic data—specifically, reports on new home sales and building permits were expected later Friday. Rising Treasury yields could make those numbers worse if mortgage rates continue to climb. But until those reports landed, markets stayed frozen. Over on Wall Street, the mood wasn’t any better. Early Friday, Dow Jones futures slipped 15 points, or 0.04%, with the Nasdaq 100 down 0.09%. The S&P 500 barely moved. The slow action came after a rough few days. By Thursday’s close, the S&P 500 had already dropped 2% for the week. The Dow was down 1.9%, and the Nasdaq was tracking a 1.5% weekly loss. Every one of those moves can be traced back to the Treasury market. If Trump’s tax plan becomes law, and it adds trillions to federal debt, bond investors will demand higher yields to cover the risk. That means more expensive debt for everyone else—from homeowners to corporations. And that’s exactly what traders are worried about. Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites

Centrifuge Brings RWAs of $400M U.S. Treasury Fund to Solana Centrifuge announced that it will expand its tokenized asset services to the Solana blockchain, starting with the $400 million tokenized U.S. Treasury bond fund (JTRSY) managed by Anemoy. The fund's corresponding deJTRSY token will enable Solana users to earn income from short-term Treasury bonds on platforms such as Raydium, Kamino and Lulo. Centrifuge said that the expansion is based on its "deRWA token" standard, which allows tokens to be freely transferred and used between DeFi protocols. The Solana Foundation also partnered with R3, a blockchain technology company focused on banks, this week to introduce real-world assets, and the Apollo Credit Asset Fund issued by Securitize will also be connected to the DeFi protocol of the Solana ecosystem.

U.S. stocks ended mixed Thursday as markets digested the House’s narrow approval of President Trump’s massive tax-and-spending package. The S&P 500 dipped 0.04%, the Dow Jones Industrial Average was flat, and the Nasdaq Composite rose 0.28%. The legislation—projected by the Congressional Budget Office to add nearly $4 trillion to the federal deficit—includes sweeping tax cuts and increased military spending. It passed the House by a single vote after last-minute revisions, including expanded deductions for state and local taxes, aimed at swaying conservative lawmakers. The bill now heads to the Senate. Another spike in Treasury yields tempered investor sentiment. The 30-year bond briefly rose above 5.16%—its highest level since 2023—before easing. The benchmark 10-year yield also pulled back slightly to 4.55%. Analysts said weak demand at Wednesday’s 20-year bond auction fueled the earlier sell-off in Treasurys, while concerns about debt sustainability persist. “Short term, the tax bill is good for the economy,” said Argent Capital’s Jed Ellerbroek. “But in the longer term, it adds to the deficit, and that’s bad for markets.” Bitcoin ( BTC ) extended its massive rally, trading above $111,000, amid optimism over Senate progress on stablecoin regulation and anticipation surrounding a Trump donor event attended by major crypto holders. Bitcoin’s rally sparked limited excitement among derivatives traders compared to past bull runs. Analysts noted that spot market demand, not speculation, drove the gains, with long/short ratios and liquidations indicating moderate bullish sentiment.

Senior Investment Strategist at Standard Chartered Bank, Foo Ken Yap, has predicted that the US Federal Reserve will cut interest rates despite expectations to the contrary from various market quarters. According to Yap, the Fed will likely take the unexpected action to cushion the bond market impact and lend support to the overall economic growth. The research strategist acknowledged the escalating concerns over the US fiscal deficit. However, he predicted that the US 10-year Treasury bond yield would decrease from 4.59% to 4% – 4.25%. Alongside this, Yap and his team at Standard Chartered Bank maintain an optimistic stance on US stocks. The bank’s research reflects its belief that significant corporate investment and resilient earnings expectations will continue to support the market. In the meantime, Standard Chartered Bank acknowledged gold’s value and role as a hedge against inflation and risks associated with recession. Related: BULLISH: Tariff Effect as Countries Start Cutting Interest Rates Yap’s prediction adds to the growing analysis and experts’ projections about the potential outcomes for the US economy in 2025. Renowned Wall Street firm Morgan Stanley considers 2025 a tough year for the US economy after concerns about stagflation, recession, and the tariff debate caused a “whipsaw” in the stock market. Several narratives have emerged since the beginning of the year following heightened uncertainties about the Trump administration’s final decision on various economic matters. However, Morgan Stanley analysts think the coast is unclear, and fiscal worries persist in the US. Related: BTC’s Price Rises as Market Reacts to the Fed Interest Rate Hike According to analysts, the job market has weakened, causing a slowdown in economic activities. Tariffs have come to stay, a development that the analysts believe would add more inflation pressure, potentially forcing the Federal Reserve into a corner. Typically, investors seek havens in alternative assets like gold and Bitcoin whenever the economic atmosphere becomes unclear. Experts believe a capital rotation into Bitcoin and other digital assets has already kicked off. This shift is gaining particular attention especially since BTC resumed its rally from the beginning of April and notably achieved a new all-time high of $111,888 just a few hours before the filing of this report on May 22, 2025. This move highlights growing investor appetite for assets perceived as hedges in an unclear economic environment. Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.