In the U.S. Treasury market, yield fluctuations represent more than numerical changes—they resonate with global investors. As discussions surrounding former President Trump's budget proposal intensify, market participants are closely monitoring political developments, particularly after Moody's recent downgrade of U.S. credit ratings cast uncertainty over bond market trajectories.

Early Wednesday (21st) Eastern Time, the 30-year Treasury yield rose 5.8 basis points to 5.025%. Meanwhile, 10-year and 2-year yields increased by 5.6 and 2.6 basis points respectively, reaching 4.537% and 3.996%. Notably, yields move inversely to bond prices , indicating investors are weighing risk-reward dynamics amid the upward yield trend.

The yield surge correlates with heated budget bill negotiations. Some Republican legislators have threatened to oppose the bill unless it includes state and local tax (SALT) deduction provisions. This stance could exacerbate federal debt levels—a concern that has unsettled markets throughout the week. Deutsche Bank analysts redirected attention to the Trump-era tax reform implications, noting that future deficit scales hinge on final legislative agreements.

Moody's Friday (16th) downgrade aligned U.S. government credit ratings with other major agencies, citing concerns about Washington's ability to finance expanding budget deficits. The 30-year yield briefly surpassed 5% on Monday (19th), revealing the bond market's second significant sell-off wave within days.

Ray Dalio, Bridgewater Associates founder, commented via social media that Moody's action carries deeper consequences than markets acknowledge. He cautioned that credit ratings alone cannot assess default risks, as they often overlook governments' capacity to repay debt through currency depreciation.

"Credit ratings fail to capture the full spectrum of risk," Dalio emphasized, "particularly when governments might employ monetary expansion to manage obligations—a scenario that could erode investors' real returns."

Beyond bond markets, investors await key housing data releases: Wednesday's 30-year mortgage rate update, followed by April's existing home sales (22nd) and new home sales (23rd) figures. These indicators may directly influence market sentiment and reveal new investment patterns.

Ultimately, Treasury market pressures stem not only from rating adjustments but also from potential foundational policy shifts. Market participants must holistically evaluate upcoming legislation, budgetary measures, and economic data to navigate this complex landscape of risk and opportunity.