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The Bond Vigilantes, Not GOP Fiscal Hawks, Are The Culprits Resisting The Big Beautiful Budget Deal
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The Bond Vigilantes, Not GOP Fiscal Hawks, Are The Culprits Resisting The Big Beautiful Budget Deal

Mounting fiscal worries weigh on bonds

David Rosenberg's avatar
David Rosenberg
May 22, 2025
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Early Morning with Dave
Early Morning with Dave
The Bond Vigilantes, Not GOP Fiscal Hawks, Are The Culprits Resisting The Big Beautiful Budget Deal
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Highlights

• Mounting fiscal worries weigh on bonds

• Bond-equity divergence is a classic risk-off signal

• More bad news piles on to the macro data

• Moody’s downgrade is more than a lagging message

Key Takeaways

• Asia Sinks, Bonds Rattle: There is no rebound today in U.S. equity futures, while European markets are off by -0.8% here in the early going. Asia suffered a rare broadly-based down day. Bond markets remain skittish, especially in Japan where 10-year JGB yields have spiked an additional +5 basis points to 1.56%. The DXY dollar index is down fractionally to 99.5 — the Asian FX complex has taken a flight of late, as reports circulate that currency discussions have been included in the “trade talks” with the Administration (notably with Taiwan, Korea, and Japan).

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