(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, May 22 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial

Markets

Bond markets creaked again after the hammer came down on a

lukewarm sale of 20-year U.S. Treasuries on Wednesday with

President Donald Trump's sweeping tax and spending bill clearing

a crucial hurdle overnight.

In today's column, I discuss how a long-standing trend of

U.S. corporations acting as cash-rich net lenders

might reverse due to increased investment in AI and

re-industrialisation efforts

, potentially creating new competition for funds with

ever-expanding U.S. government borrowing.

But now onto all the market news.

Today's Market Minute

* U.S. President Donald Trump's sweeping tax and spending

bill cleared a crucial hurdle on Thursday, as the House of

Representatives voted roughly along party lines to begin a

debate that would lead to a vote on passage later in the

morning.

* Foreign investors could once barely imagine that China would

invade neighbouring Taiwan, but with Donald Trump as president

of the United States, many view it as a tail-risk scenario they

must prepare for, although they cannot find ways to do so.

* Stocks and the U.S. dollar fell on Thursday, while

longer-dated Treasury yields steadied near their highest in 18

months as worries of a worsening fiscal outlook in the world's

biggest economy remained at the top of investors' minds.

* Bitcoin rose to its highest level on record on Wednesday,

eclipsing the previous high from January, as risk sentiment

continues to improve after last month's tariff-induced selloff.

* Oil prices fell more than 1% on Thursday following a report

that OPEC+ is discussing a production increase for July, stoking

concerns any potential increase in global supply would exceed

demand growth.

* Solar farms are set for a record stretch of power sector

dominance in Germany after becoming the single largest

generation source in the country at the earliest point of the

year ever.

Hammer comes down

Markets fear the bill will bake in elevated deficits and

rising debt piles over the remainder of the administration's

term at least. The proposed legislation lifts the $36.2 trillion

debt mountain by another $3.8 trillion over the next decade,

according to the nonpartisan Congressional Budget Office.

Lawmakers were due to vote again to pass the measure later

today and send it on to the Republican-led Senate, which could

take weeks to act. And it was not yet clear whether House

Speaker Mike Johnson would secure the necessary support from his

own narrow 220-212 seat Republican majority.

But bond markets are getting restive, as the poor 20-year

auction displayed. The U.S. 30-year yield reached 5.108%, its

highest since October 2023, and the 20-year yield

hit 5.126%, its highest since November 2023.

The 30-year 'long bond' yield is now just 7 basis points

from 2023's peaks. A break above that would put it at its

highest since the 2007 banking crash unfolded - a shock which

forced the Federal Reserve to spend years in bond buying

support.

Trouble at the long end of the Treasury market was reflected in

government bond markets around the world, with Japan still

grappling with surging ultra-long yields to record levels too

and Britain's 30-year yield hitting its highest since April's

volatility.

Bank of Japan board member Asahi Noguchi said on Thursday he

saw no need for the central bank to intervene in the bond market

to stem recent sharp rises in super-long yields, describing the

moves as "rapid but not abnormal".

Compounded by aggravated inflation readings and tariff-related

price concerns, the debt worries unnerved stock markets again

too. Wall Street stock indexes fell back more than 1% on

Wednesday and markets in Asia and Europe were all lower earlier

today.

There was some respite from crude oil prices, however. U.S.

benchmark retreated 1% after a report that OPEC+ is

discussing a production increase for July, stoking speculation

that global supply could exceed demand growth.

The dollar got a modest lift meantime as signals from

the G7 finance chiefs in Canada suggested Washington held back

from demanding a higher yen in bilateral trade talks with

Japan, as some pre-meeting speculation had fretted about.

U.S. Treasury Secretary Scott Bessent and Japanese Finance

Minister Katsunobu Kato issued a statement on Wednesday that the

dollar-yen exchange rate currently reflects fundamentals, a rare

and explicit statement on the prevailing market situation.

Bessent and Kato "reaffirmed their shared belief that

exchange rates should be market determined and that, at present,

the dollar-yen exchange rate reflects fundamentals", the

Treasury Department said in a statement.

The somewhat contradictory statement also said that they did

not discuss foreign exchange levels.

On Wednesday, South Korea's won rose sharply against

the dollar after a media report that Washington had demanded

that Seoul come up with measures to boost the won as part of any

trade deal. The won gave up most of those gains today, however.

Elsewhere, attention was on worldwide business surveys for May.

Composite readings for euro zone and Japanese firms showed

activity there unexpectedly slipping back into contractionary

mode this month, due largely to fresh weakness among service

sector companies.

U.S. equivalents are due out later, along with weekly

jobless numbers.

Be sure to check out today's column, which looks at

potential rumblings in U.S. government debt markets from the

perspective of domestic U.S. corporate demand for credit going

forward.

Chart of the day

Longer-dated U.S. Treasury yields climbed again after a $16

billion sale of 20-year bonds on Wednesday met lukewarm demand

from investors just as Congress thrashed out the details of

Donald Trump's fiscal bill.

With long-term debt yields rising across the world,

investors are concerned about mounting deficits, debt piles and

tariff-related inflation risks.

The New York Fed's estimate of the 10-year term premium -

the compensation investors demand for holding 10-year debt to

maturity as opposed to just rolling over short-term securities -

is close to its highest in more than a decade and almost twice

its 20-year average.

Today's events to watch

* U.S. weekly jobless claims (0830EDT), flash May

manufacturing surveys from S&PGlobal(0945EDT), Kansas City

Federal Reserve May manufacturing survey (1100EDT), April

existing home sales (1000EDT); Canada April producer prices

(0830EDT)

* U.S. Treasury sells 10-year inflation-protected securities

* G7 finance ministers and central bankers meet in Banff in

Alberta, Canada

* New York Federal Reserve President John Williams and

Richmond Fed President Thomas Barkin speak; European Central

Bank Vice President Luis de Guindos speaks; Bank of England

Chief Economist Huw Pill speaks

* U.S. corporate earnings: Analog, Autodesk, Copart ( CPRT ),

Deckers, Intuit, Ralph Lauren, Ross, Workday

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.