(Bloomberg) — Asian shares fell and Treasuries steadied after a selloff sparked by concerns about a proposed tax-cut bill that threatened to enlarge the US deficit.
A regional stock index retreated from a seven-month high and US equity-index futures fluctuated after the S&P 500 index had its sharpest slide in a month. Asian currencies strengthened while a gauge of the dollar edged down for a fourth consecutive session. Yield on the 30-year US sovereign bond stayed above the crucial 5% mark. Gold gained as investors pushed back on the tax-cut plan. Bitcoin hit a record.
Opposition to President Donald Trump’s tax proposals and the ballooning deficit is showing up in the bond market with Treasuries falling across the curve Wednesday. Concerns in the bond market – coming right after last week’s downgrade of US debt – sapped sentiment after a sharp rebound in risk assets over the past month that put US stocks at a striking distance of a bull market.
Long-term yields “are probably biased to the upside in the very near term, given concerns over the upcoming tax bill bill, in terms of adding to the deficit,” Audrey Goh, a head of asset allocation at Standard Chartered Wealth Management Group, said in a Bloomberg TV interview. There’s also some uncertainty on “how much demand will be out there for long-term Treasury bills.”
The concern in the bond market is that the tax bill would add trillions of dollars in coming years to already bulging budget deficits at a time when investor appetite is waning for US assets across the globe.
House Republican leaders released a new version of Trump’s massive tax and spending bill with a higher limit on the deduction for state and local taxes and other changes in a bid to win over warring GOP factions to support the legislation.
Traders have been piling into bets that long-term bond yields would surge on concerns over the US’s swelling debt and deficits, with Moody’s Ratings on Friday lowering the nation’s credit score below the top triple-A level. For many, the message was: Unless America gets its finances in order, the perceived risks of lending to the government will rise.
In Japan as well, the sovereign debt market was flashing a warning to the central bank that dialing back its bond purchases needs to be done with great care. The issue was in sharp relief this week, with investors shunning an auction of government debt and yields soaring.
“It’s a global issue as investors struggle with a new playing field,” said Nick Twidale, chief analyst at AT Global Markets Australia. With the spike in Japanese government bond yields, Japan’s fiscal health could become “a concern” for global investors, he said.
In the currency market, the dollar was little changed against its European peers but weakened against most Asian currencies, including the yen and Indonesian rupiah, as traders mulled the potential for foreign-exchange agreements in trade talks. The won held on to most of its overnight gains after local media reported that the direction of the currency was discussed with the US.
Markets Live Strategist Mary Nicola says:
“Asia’s currencies are poised to rise given valuations and the Trump administration’s commitment to mending glaring imbalances. The pace and scale of those gains will depend less on fundamentals and more on a delicate balance of geopolitics, policy signaling, and the trade-offs between growth and global diplomacy.”
Meanwhile, Bitcoin surpassed $110,000 for the first time with traders increasingly bullish on the prospects of the original cryptocurrency.
“Bitcoin, and the crypto market in general, have largely decoupled from equities over the last few days,” said Richard Galvin, co-founder of hedge fund DACM. “Bitcoin continues to benefit from its market position as a non-system, store of value and as global bond market starts to look fragile, Bitcoin has continued to strengthen.”
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 12:38 p.m. Tokyo time
- Japan’s Topix fell 0.7%
- Australia’s S&P/ASX 200 fell 0.5%
- Hong Kong’s Hang Seng fell 0.5%
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.1335
- The Japanese yen rose 0.3% to 143.23 per dollar
- The offshore yuan was little changed at 7.2031 per dollar
Cryptocurrencies
- Bitcoin rose 2.3% to $110,759.72
- Ether rose 4.2% to $2,616.05
Bonds
- The yield on 10-year Treasuries was little changed at 4.59%
- Australia’s 10-year yield advanced three basis points to 4.48%
Commodities
- West Texas Intermediate crude fell 0.1% to $61.50 a barrel
- Spot gold rose 0.8% to $3,339.91 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi, Alice French and Suvashree Ghosh.
©2025 Bloomberg L.P.
