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Wall Street suffered its biggest selloff in a month on Wednesday as Treasury yields spiked on worries that government debt would swell by trillions of dollars if Congress passes U.S. President Donald Trump’s proposed tax-cut bill.
The slide in U.S. stocks accelerated mid way through the trading session after a US$16-billion auction of 20-year bonds attracted only soft demand from investors, in what was seen as a test of foreign appetite for U.S. debt.
A deteriorating fiscal outlook has captured the market’s attention after Moody’s Investors Service on Friday cut the United States’ sovereign credit rating from the top designation of triple-A. Yields on longer-term U.S. bonds have been rising steadily since the start of May, driven by U.S. fiscal concerns and worries that Trump’s unpredictable economic policies will not only stoke inflationary pressures but also erode the appeal of U.S. assets.
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