This week, Wall Street experienced volatility as investors grappled with the increasing U.S. national deficit and deteriorating confidence in the economy. The Treasury auction of $20 billion in bonds saw weak demand, leading to a spike in yields above 5%, raising concerns about rising costs for consumers. The European Central Bank implicated U.S. tariff policies as a risk to the global financial system, and Moody's downgraded U.S. creditworthiness, citing the adverse effects of ongoing tax cuts on government revenue and deficit management.
"Frequent shifts and reversals in tariff policy, alongside significant changes in the geopolitical environment, could have major economic and financial impacts," the European Central Bank said.
"We do not believe that material multi-year reductions in mandatory spending and deficits will result from the current budget proposals," according to a Moody's report.
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