Investors are selling billions of dollars of US bonds in a dramatic turnaround signaling fears over America’s fiscal future, according to a new report.
Nearly $11 billion in long-term bonds and corporate debt has been dumped in just three months, reports the Financial Times.
The Q2 2025 selloff ends a five year run of net inflows into long-term US bond funds, with the previous selloff happening back in the first quarter of 2020.
PGIM’s top fixed income strategist Robert Tipp says the shift shows investors are wary of rising inflation and increasing government debt.
“It’s a volatile environment, with inflation still above target and heavy government supply as far as the eye can see. This is driving a skittishness about the long end of the yield curve, and a general uneasiness.”
The news comes amid the passing of President Trump’s “big beautiful” spending bill, which raises the debt ceiling by $5 trillion, extends 2017 tax cuts permanently, boosts spending on defense and border security, cuts parts of Medicaid and SNAP programs, eliminates clean energy tax credits, and introduces tax exemptions for tips and overtime.
Although the impact of the legislation is highly contested by the Trump administration, the Congressional Budget Office (CBO) estimates the bill will add approximately $3.5 trillion to the federal deficit over the next decade.
Treasury Secretary Scott Bessent says he believes the bill will ignite unprecedented economic growth and offset the deficit through increased revenue, while establishing the US as the global leader in manufacturing and job creation.
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