U.S. Debt and Tax Bill: Investors Brace for Market Shifts

Investors are on edge as they anticipate potential increases in the U.S. national debt, spurred by a new tax and spending bill approaching the Senate. Concerns are mounting that the legislation could lead to sustained higher bond yields.

The markets have already shown sensitivity to the U.S. debt situation, as highlighted by Moody's recent downgrade of the sovereign credit rating. As the bill progresses, fears persist that spending cuts could be diluted, leading to deficit expansion.

While investors acknowledge the potential growth stimulated by tax cuts and tariff revenues, there is skepticism about the bill's ultimate impact. Lawmakers are closely monitoring market signals and voter sentiments as they prepare to debate the bill.

(With inputs from agencies.)