The Big Beautiful Bill Is Spotlighting This Danger Sign

By Larry Benedict, editor, Trading With Larry Benedict

President Trump hailed it as “the biggest bill of its kind ever done, by far.”

Last Friday, as the nation celebrated its 249th birthday, Trump signed “The One Big Beautiful Bill” into law.

The polarizing bill barely got out of Congress due to concerns over cuts to Medicaid. Vice President JD Vance was forced to make the tie-breaking vote in the Senate. It passed by only four votes in the House of Representatives.

The bill became even more infamous due to sparring between Trump and Elon Musk, who blasted the “pork” contained in the bill.

Admittedly, it’s a massive spending and tax bill. Among other things, it makes tax cuts from Trump’s first administration permanent.

But the bill’s hefty price tag comes at a time when the spotlight is shining brighter on the nation’s fiscal imbalances.

If those debt concerns boil over, then bondholders and stock market investors alike could feel the pain…

The Debt Clock Is Ticking…

I was visiting New York City recently and got to see an iconic landmark firsthand.

It wasn’t the Statue of Liberty or Times Square.

It was the U.S. National Debt Clock. Located between 42nd and 43rd Streets in Manhattan, the clock is a billboard showing the U.S. debt, along with each American family’s share.

The nation’s current debt stands at $36 trillion. And it’s only going to get worse.

The debt pile is nearly 100% relative to our gross domestic product (GDP). That means the existing debt is now the size of the U.S. economy. A high debt-to-GDP ratio can indicate that a country may have trouble paying off debts.

But trillion-dollar deficits have become the norm… and our debt looks set to grow.

Deficit spending was already projected to run anywhere from $1.9 trillion to $2.7 trillion per year over the next decade.

And that was before the Big Beautiful Bill. It’s projected to add another $3.9 trillion to the national debt.

Growing concerns over the debt load could spill into the market for U.S. Treasury securities… and that’s reason for concern…

Interest Rates Are Approaching a Key Level

A jump in long-term interest rates can signal that investors are becoming more concerned about U.S. finances.

By demanding higher interest rates to lend to the government, investors are seeking more compensation to hand over a loan.

That may reflect an increasing risk of default. This makes the 30-year Treasury yield a critical chart to watch. Here’s the chart:

(Click here to expand image)

The 30-year Treasury yield is creating a pattern called an ascending triangle. The dashed lines show how yields are making a series of higher lows while encountering resistance at the 5.0% level.

After a dip in late June, the 30-year yield is rising once again… and is close to breaking above the 5% level.

The last time the 30-year was above 5% happened in 2007. Back then, the debt-to-GDP ratio stood at 35% compared to 100% now.

Rising Treasury yields can harm both the market and the economy. Bond prices fall as yields rise. Rising rates can also pressure stock market valuations.

There’s also the impact on the economy. The yield on Treasurys drives interest rates on everything from home mortgages to auto loans and credit cards.

That’s how a breakout in the 30-year Treasury yield can spill over to investor portfolios and the broader economy.

The market is brushing off concerns over rising debt levels for now.

But a breakout in the 30-year Treasury yield could mean that’s about to change…

Happy Trading,

Larry Benedict
Editor, Trading With Larry Benedict