Where Bond Yields Are Headed as Big Beautiful Bill Spooks Treasury Markets

Is the so-called Big Beautiful Bill too big? Thomas Massie, a Republican who has represented Kentucky’s 4th congressional district since 2012, has been a vocal critic of the bill.

Massie says the Big Beautiful Bill will add $20 trillion to the federal debt over the next 10 years. He also states that the bill will force interest rates higher on the existing $36 trillion federal debt, as bond buyers realize that spending and the debt will continue to increase over time.

Is Massie correct? The charts seem to agree. 

The yield on the bellwether 10-year U.S. Treasury note, which traded below 4% in early April, closed just below 4.5% on Monday. Worse, the yield on that T-note appears to be headed above 5%.

The 10-year yield chart has formed an inverted head-and-shoulders pattern (shaded yellow) over the past three months. That pattern suggests the yield on the 10-year could rise as high as 5.2%.

That increase in yield could have a negative effect on the housing market, as the yield on the 10-year note is closely tied to mortgage rates.

Meanwhile, the yield on the 30-year Treasury bond is already flirting with 5%. The yield on the long bond climbed as high as 5.03% on Monday before pulling back to close at 4.90%. According to the chart, the 30-year T-bond’s yield could climb to 5.6%. 

The yield chart on the 30-year Treasury shows an ascending triangle pattern (black dotted lines). There is heavy resistance in the 5.15% area, dating back to late 2023. Once that area is cleared, the yield on the 30-year Treasury bond will be at a multi-decade high.

It’s interesting that shorter-term yields do not appear ready to make similarly dramatic moves. In fact, in the longer term, the yield on the 2-year Treasury is moving in the opposite direction.

While the yield on the 2-year Treasury note has recently climbed from 3.67% to 3.97%, it’s in an overall bearish trend. The 2-year’s yield has formed a bearish descending triangle pattern (black dotted lines) over the past six months.

The Big Beautiful Bill is a huge mood shift from recent efforts to rein in wasteful spending. The efforts of the waste-cutting Department of Government Efficiency, or DOGE, will be rendered meaningless if this bill passes in its current form. If government waste is as pervasive as DOGE suggests, then a smaller version of the Big Beautiful Bill would seem to be appropriate. 

At the time of publication, Ponsi had no positions in any securities mentioned.