Treasury Yields Fluctuate
Published May 23, 2025
U.S. Treasury yields spiked midweek as investors awaited the outcome of the House vote on the President’s tax and spending legislation. Yields lowered towards the end of the week as a slight decline in jobless claims pointed to a stable labor market.
On Thursday, the House of Representatives narrowly advanced a large tax bill to the Senate in a 215-214 vote, after two consecutive nights of debate. The 1,100-page legislation includes tax cuts along with increased spending on the military and is projected to add nearly $4 trillion to the federal deficit. The bill also extends both corporate and individual tax cuts originally enacted under the 2017 Tax Cuts and Jobs Act.
“Short term, the tax bill is good for the economy,” said portfolio manager at Argent Capital Management, Jed Ellerbroek. “It reduces taxes for lots of people, it increases spending, especially on defense, and so those things are stimulative to the economy and are going to boost GDP growth. Long term, for the bad market, it is bad news. Yields are going higher, which means prices are going down because Treasuries are becoming incrementally less appealing and trustworthy, as our budget deficit stays extremely high for a very long period of time with no signs of it going back to normal.”
The benchmark 10-year Treasury note yield opened the week of May 19 at 4.48% and traded as high as 4.63% on Thursday. The 30-year Treasury bond opened the week at 4.95% and traded as high as 5.15% on Thursday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 2,000 to 227,000 for the week ending May 17, slightly below economists’ expectations of 230,000 claims. Continuing claims increased by 36,000 to 1.90 million.
“Employers have so far elected to keep their staff headcounts steady despite the swirling winds of unprecedented policy changes for the economy emanating from down in Washington,” said chief economist at FWDBONDS, Christopher Rupkey. “There is no serious deterioration in the labor market to date, and the economy is weathering the storm for now.”
The 10-year Treasury note yield finished the week of May 19 at 4.52% while the 30-year Treasury note yield finished the week at 5.04%.
