The Bond Market Begins Its Revolt Over the GOP’s “We Are All Going to Die” Bill

By Jacob Weindling  |  July 1, 2025 | 3:13pm
Photo by Andrew Harnik/Getty Images
Congress Markets
The Bond Market Begins Its Revolt Over the GOP’s “We Are All Going to Die” Bill

It’s far from the headline from a bill that Republican Senator Joni Ernst aptly summarized as “well, we are all going to die,” but its effect on the deficit is already being felt out in the real world. This monstrosity will take health care away from millions of people to pay for a modern gestapo’s budget that exceeds the GDP of over 100 countries while giving record tax cuts to the wealthy elite, but the GOP’s We Are All Going to Die Bill that just passed the Senate today is also going to blow out the deficit, per everyone across the ideological spectrum familiar with how simple math works. In a world where ICE can be made a modern Praetorian Guard with no pushback, the bond market may be one of our best hopes to stop this impending horror engulfing America, although some reports suggest the rest of this bill is so catastrophic that its deleterious effects will be seen pretty quickly.

Spoke with someone who works with a public hospital system. His assessment of the effects of the GOP spending bill: “I think this is going to be a very apparent catastrophe, very quickly.”

— Philip Bump (@pbump.com) July 1, 2025 at 11:35 AM

Lefties and liberals have justifiably become hostile to the braindead hOw WiLl YoU pAy FoR iT question that reactionary centrists never ask of people making bombs, just those trying to give food and shelter to people. During the Obama era, this was cynically weaponized in a time where, as Dick Cheney correctly said one administration prior, “deficits don’t matter.” They didn’t matter then because the debt was relatively low compared to now and interest rates were much lower, especially under Obama, making the government’s annual interest expense much less onerous. This is the aspect of the debt that very much does matter every year, because money comes out of the budget on an annual basis to pay for interest expense on that debt. And it’s a lot.

Good chart from the Treasury showing how interest expense is becoming a much bigger problem. This is $200B less than the *entire* Pentagon budget for 2026.

Annual interest expense will only rise along with this disaster of a bill that blows out the deficit, and it creates a self-perpetuating problem where higher deficits beget higher interest rates which increase the cost to pay down debt and require more deficit spending to cover, raising rates further, etc…In order for the government to fund itself when it runs deficits, it must issue more debt, also known as Treasury Bonds, which pay interest to the holders of US debt. If there is a greater supply of bonds in the market, that will lower bond prices, and thus raise interest rates which move inversely to bond prices. What the bond market is doing today is instructive as to how it interprets a world where the Republican Party’s monstrous bill is one step closer to becoming a reality, and it is crystal clear in communicating what it’s seeing.

Interest rates starting to rise in anticipation of the GOP blowing out the deficit.

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— Jacob Weindling (@jakeweindling.bsky.social) July 1, 2025 at 11:40 AM

Higher interest rates on Treasuries in response to this bill mean that its impacts will be even more disastrous on our government’s finances, as the dynamic CBO score for it demonstrated. The ratings agency Moody’s downgraded American debt in May as a seeming message to the Republican Party of how the entire financial world sees their bill, as there is no mystery about what it does to America’s fiscal standing. Even Elon Musk could see it from deep in a k-hole and has bet his corporate comeback on voicing these very obvious concerns. This downgrade and its reverberations will also have the net effect of raising interest rates for all Americans, as everyone with a mortgage knows how tied your interest rate is to your credit score, and our collective credit score is going down every minute this bill gets closer to passing.

It is much more difficult to glean any kind logic from the stock market’s reactions anymore, but there is a split today that backs up the bond market’s movement as very real. The Dow Jones was up around one percent today, while the Nasdaq was down around one percent. One explanation for that divergence could be higher interest rates, as the Nasdaq is much more dependent on future cash flow projections, which decline when interest rates rise. The smart money in the bond market has long been signaling to the Republican Party that it thinks their policies are designed to crash the economy, and today is no different.

Jerome Powell and most of the Federal Reserve don’t want to lower interest rates at the next Fed meeting in July because the full effects of Trump’s stupid trade war are still to be determined, but all known laws of economics say we should see inflation come back in the short term as the surcharges Trump is imposing on all imported products get passed down to consumers (like how Walmart said it would begin raising prices in June). If the bond market is raising rates on its own volition, that makes Trump’s demand to bring the Fed Funds Rate down a staggering amount even more difficult to enact. If he were to lower the Fed Funds Rate and then inflation came roaring back, well, that’s what happened in the 1970s to give us an extended bout of stagflation. What Trump is demanding is quite literally, the exact thing the Fed has said they wanted to avoid since they began hiking interest rates in March 2022.

You cannot brute force the bond market into doing what you want. The Illuminati are real, and they hold US Treasuries, although a lot less of them are holding long-term treasuries as the Republican Party itself presents a duration risk to investors. No one wants to buy a bond at a real post-inflation return of three percent, then watch some dumbfuck who doesn’t know how tariffs or deficits work spike inflation and cut your real return to two or one percent. There is a risk premium attached to American assets now that was not there six months ago when a different party controlled the government, and it’s leading to a world where bonds and the dollar itself are off to some of the weakest years since the 1970s (weird how that stagflationary era keeps coming up as a comparable for Trump’s stagflationary agenda!). Republicans are not seen by smart money as responsible fiscal stewards anymore, and if bond yields continue to rise as this murder bill becomes official, the economy could become one of its first casualties before ICE even gets its full suite of concentration camps.

 
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