By coinnews 
00:00 Speaker A
The US House of Representatives narrowly passing President Trump’s signature tax bill this morning where it will now head to the Senate. Lawmakers expected to press for extensive changes on arrival with passage not expected until August. That’s when Treasury Secretary Bez sent said debt limit measures could run out. Bonds resuming their selloff as investors assess deficit risk in Washington with the bill including a $4 trillion dollar increase in the US debt ceiling. Joining us now to break down what all of this means for investors, William Sells, HSBC Global Private Banking and Wealth Global CIO. William, it’s nice to see you. Um so we have seen um perhaps the bond vigilantes come out as they are sometimes referred to. We have definitely seen uh concerns start to creep back in about deficits. How sustained do you think this move in Treasuries could be in the US and then sort of the ripple effect throughout the equity market?
01:40 William Sells
Yeah, it’s interesting how markets sometimes, you know, need a new narrative, and I wonder actually what is so new about this. We know that Moody’s have been looking at the rating for quite a a while. It’s also the third rating agency to act. So, usually people are more surprised by the first and the second. Um, you know, the debt pile and the debt issues are not, um, you know, are not new. I don’t want to gloss over this, but if you look historically, there’s almost zero correlation between where bond yields are and the level of debt. Look at the experience in Japan. I would rather look at, um, you know, where is inflation going. So, I think the markets will move from the current narrative to the outlook for inflation and obviously their tariffs play an important role.
02:57 Speaker B
And so, with regard to the kind of broader tradeable moment that investors were looking for over the course of this year, I mean, coming off of tariffs, it seemed like many of the investors that we spoke with were saying, okay, well, the next big event that you could look towards is some of the big beautiful bill movement there and what that could eventually mean as a tradeable moment. But are these things actually playing about, or playing out as tradeable as expected coming into them?
03:43 William Sells
So the equity market was, um, you know, quite excited about, you know, about, um, taxes being cut, um, and took the positive out of took the positive angle on that, um, earlier this year. But of course, unfortunately, the market has started to look more at the, um, you know, the budgetary, um, impact of any tax cuts, and therefore, sort of the upside of, um, you know, a very generous bill, um, has been reduced, um, for the equity market. So I now think that what we will now need to see is really, um, you know, the the impact of tariffs on growth, whether or not we see that bigger impact, and I do think that evidence will also be mixed. It will probably take quite a long time before we see it in economic data. So for example, there are those that argue that consumers and businesses are going to, um, freeze, are going to be slow, um, and take a wait and see approach. Others are arguing that consumers, um, you know, may actually front load some of their purchases if they believe that, um, you know, after the 90 day reprieve, um, those tariffs could go up again. So you will see very, very mixed data. The way for investors to handle this is to buy companies that are solid, to look for quality, and to look for those companies that are supported by very strong, um, structural trends like AI, for example.