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Marketplace

The bond market is panicky over that GOP bill

Marketplace

American Public Media

Business, News

4.68K Ratings

🗓️ 21 May 2025

⏱️ 26 minutes

🧾️ Download transcript

Summary

The latest GOP spending and tax bill would add an estimated $3.8 trillion to the national deficit over the next decade. More debt means the government will issue more bonds. But investors don’t necessarily want a flooded bond market — we’ll explain why. Also in this episode: Stakeholders report longer waits for financial aid information since Department of Education layoffs, retailers set their sights on European markets to alleviate tariff pressure and workplace adoption of AI is tricky to track.


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Transcript

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0:00.0

This is it, folks. Our May fundraiser ends this Friday, and it's your last chance to help us reach an important goal with federal funding for public media on shaky ground at best. We're preparing for a future where we have to rely even more on you, our listeners. Your support powers trusted, independent journalism about this economy, and it makes it accessible to millions of listeners.

0:23.8

So let's hit our goal before Memorial Day weekend, hey?

0:26.2

Give now at Marketplace.org slash donate.

0:29.6

Marketplace.org slash donate and thanks.

0:33.1

Repeat after me, people. Watch the bond market from American public media. This is Market.

0:45.6

In Los Angeles, I'm Kyle Rizdahl. It is Wednesday, today 21 May. It is always to have you along, everybody.

0:57.9

You know, the politics of whatever's happening inside the House Republican caucus about the big

1:02.4

tax cut bill they're working on, that is, thankfully, somebody else's story to cover.

1:07.8

The economics of it, though, is smack in our sweet spot, and we will begin

1:12.4

today with the observation that adding, according to the nonpartisan congressional budget office,

1:17.8

$3.8 trillion to the national debt and deficit over the next decade, has the bond market more than

1:25.2

a little bit concerned? The yield on the 10-year treasurer note

1:28.2

hasn't been this high since February. It's up half a percentage point since early April,

1:32.6

which I know doesn't sound like a lot, but in bond market speak, is a boatload. So marketplace,

1:39.3

Justin Ho is going to get us going by explaining the mechanics of what's going on and, more importantly,

1:44.9

why it matters.

1:46.6

The Federal Reserve controls plenty of interest rates, especially short-term interest rates on government bonds.

1:52.1

But rates on long-term treasuries, as in seven or ten or thirty-year bonds, those are

1:58.4

determined by the market, by supply and demand.

2:01.4

Definitely supply right now is front-center.

2:04.3

Randy Vogel is head of fixed income at Wilmington Trust.

2:07.5

He says the bond market is concerned that the GOP's tax and spending package will pile on debt,

...

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