US Treasury Yields Climb Amid Budget Gridlock and Moody’s Downgrade

US Treasury yields surged across maturities as Washington’s fiscal stalemate and a credit rating downgrade from Moody’s eroded investor confidence. The 30-year yield jumped 6 basis points to 5.023%, while the 10-year and 2-year yields ROSE 5bps and 3bps respectively.

Market participants aren’t just responding to technical factors—the political impasse over fiscal policy has amplified concerns about deteriorating US creditworthiness. Moody’s Friday downgrade to the second-highest tier mirrors earlier moves by other rating agencies, compounding pressure on an already fragile bond market.

The yield spike reflects growing skepticism about Washington’s ability to address structural deficits, particularly with proposed tax legislation threatening to exacerbate fiscal imbalances. Rising yields continue their inverse dance with bond prices, each basis point MOVE equivalent to 0.01% in the high-stakes calculus of fixed income markets.