IMF says U.S. Treasury market remains orderly amid tax plan debates

The U.S. Treasury market remains orderly, and government bonds continue to serve as liquid safe-haven assets, according to a spokesperson from the International Monetary Fund.

The Fund is closely monitoring the tax plans currently taking shape in Congress.

Long-term U.S. government bond yields have risen sharply this week following Moody’s downgrade of the U.S. credit rating and amid Republican discussions of a sweeping tax package that could add trillions to the nation’s debt.

Despite some market volatility, the IMF confirmed that market functioning, including in the Treasury market, remains orderly. The Republican-controlled House of Representatives narrowly passed a tax and spending bill that would implement much of President Donald Trump’s policy agenda, increasing federal debt by an estimated $3.8 trillion over the next decade.

The IMF will evaluate the impact of the bill once it passes through the Senate and is enacted. The Fund also noted that a recent reduction in U.S.-China trade tensions could support global economic growth, although overall uncertainty in the global economic outlook persists.