• Surging bond yields jeopardize Trump tax cut extension.
• Key Congressmen want spending cuts to offset the tax cuts as debt fears mount.
• Retirement funds can be shielded by moving into safe haven assets like physical gold and silver held in a Gold IRA.

Tax Cuts Jeopardized

Extending his 2017 tax cuts was a cornerstone of President Trump’s platform. Now a volatile U.S. bond market is challenging the possibility of fulfilling that promise. Rising bond yields reflect investor fears about the federal deficit and interest costs. They could derail plans to keep the tax breaks. And leave Americans facing higher taxes and a more uncertain financial future.

Bond Market Pressures Mount

In the years since the 2017 tax cuts, the U.S. national debt has ballooned to $36 trillion, with annual deficits exceeding $2 trillion. This surge in debt has caused a significant increase in interest payments. They are now the second-largest federal budget item after Social Security. Treasury yields, which underpin borrowing costs across the economy, are now at their highest levels since late 2023. For example, the 10-year Treasury yield recently rose to 4.79% before settling slightly lower.¹

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These rising yields are a concern for lawmakers and investors alike. Rep. Ralph Norman (R-S.C.) noted, “The buyers of our bonds are getting nervous that we’re at the point that we cannot pay it back. That affects every one of us.” As interest rates climb, servicing the debt costs more. Further straining the government’s finances.³

The Challenges of Extending the Tax Cuts

Congress passed the Trump tax cuts, estimated to cost $4 trillion over the next decade, using budget reconciliation. This let Republicans bypass a Senate filibuster. However, to comply with these rules, the cuts to individual income taxes were set to expire at the end of 2025. Extending them now faces formidable obstacles.

Key Republican lawmakers want big spending cuts to offset the tax cuts. They warn that ignoring the deficit could raise interest rates. Rep. Andy Barr (R-Ky.) emphasized, “The bond market is telling Congress that if we don’t get our fiscal house in order, everybody’s mortgage rates, everybody’s credit card rates, everybody’s auto loan rates are going to continue to go up.”⁴

The bond market’s reaction underscores these concerns. Stephen Jen, CEO of Eurizon SLJ Capital, explained, “The bond market has begun to express their discomfort, and inflation being sticky is also a warning for Trump 2.0.”⁵

Political Divisions Add Complexity

Republican lawmakers face pressure from within their ranks to ensure fiscal discipline. Some conservatives, including Rep. Chip Roy (R-Texas), will not support tax cuts without spending cuts. “As we speak, interest rates are going up, our debt is getting refinanced at higher interest rates, and we have more debt,” Roy said, emphasizing the need for fiscal responsibility.⁶

What This Means for You

For the average American, the stakes are high. Higher Treasury yields mean higher interest rates on mortgages, credit cards, and auto loans. Putting even more strain on household budgets.

If the 2017 Trump tax cuts (Tax Cuts and Jobs Act or TCJA) expire at the end of 2025, taxes will rise significantly for many Americans. They will jump an average of 22%. Middle-income families, such as a household earning the median income of $80,610, could face a $1,695 hike. The standard deduction would shrink, the Child Tax Credit would halve for 40 million families, and the top marginal tax rate would rise to 39.6%. Small businesses may lose a vital deduction, and AMT filings could surge from 200,000 to 7.3 million, creating widespread financial strain.⁷

Rep. Barr highlighted the potential upside of addressing the deficit: “What we need to say to the American people is, look, this is not austerity. This is not painful cuts. This is about lowering your mortgage payment.” But achieving this balance will require tough political choices. It will also need significant bipartisan cooperation, a rare thing in Washington.⁸

Conclusion

Rising bond yields and fiscal pressures highlight the need to protect your assets in an uncertain economy. The Trump tax cuts’ fate will affect the economy and your personal finances. One cannot ignore their implications, whether they are extended or left to expire. To protect your portfolio, consider diversify with precious metals. Gold and silver, held in a Gold IRA, can offer long-term security against an increasingly uncertain economic future. To learn more, contact us today at 800-462-0071.

Notes
1. https://www.foxbusiness.com/politics/trumps-tax-cut-plans-face-bond-market-headwinds-gop-lawmakers-warn
2. https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iqyCi_y8OH44/v3/-1x-1.webp
3. https://www.reuters.com/markets/rates-bonds/republicans-congress-warn-rising-us-bond-yields-could-hit-trumps-tax-cut-plans-2025-01-16/
4. https://www.reuters.com/markets/rates-bonds/republicans-congress-warn-rising-us-bond-yields-could-hit-trumps-tax-cut-plans-2025-01-16/
5. https://www.msn.com/en-us/money/markets/warning-for-trump-as-bond-markets-call-bluff-on-gop-tax-cut-plan-reports/ar-AA1xospA
6. https://www.msn.com/en-us/money/markets/warning-for-trump-as-bond-markets-call-bluff-on-gop-tax-cut-plan-reports/ar-AA1xospA
7. https://waysandmeans.house.gov/2025/01/07/millions-of-taxpayers-will-have-to-do-returns-twice-while-paying-higher-taxes-if-key-trump-tax-reforms-expire/
8. https://www.foxbusiness.com/politics/trumps-tax-cut-plans-face-bond-market-headwinds-gop-lawmakers-warn

 

• Even as optimism returns to the economy, risks to the commercial real estate sector are increasing.
• The CRE sector is threatened by massive maturing debt, high interest rates, soaring vacancies and declining property values.
• Physical precious metals held in a Gold IRA can offer long-term protection from the impact of a CRE collapse.

CRE Risks Grow

Even as optimism spreads throughout the economy, significant risks remain—or in some cases, are growing. The commercial real estate (CRE) market is on the brink of a financial abyss. The effects will go beyond property owners. The fallout threatens the stability of the broader economy, and the retirement funds of countless Americans.

Crisis in the Making

In November 2024, the delinquency rate for office commercial mortgage-backed securities hit 10.4%. It was near the 10.7% peak during the 2008 financial crisis. This marks the fastest two-year increase on record, climbing 8.8% since 2022. Persistent high vacancy rates and declining rents have accelerated the CRE sector’s severe downturn. Older office buildings have been hit hardest, with property values plummeting by 50% to 70%. In some cases, these properties are now worthless.¹

Roots of the Problem

The current crisis stems from several interconnected factors:

Bad Investments and Low Interest Rates: The pandemic’s low interest rates spurred a wave of unsustainable loans. When interest rates rose, borrowers faced soaring debt payments, often doubling or more.

Remote Work and Zoning Restrictions: The rise of remote work has cut demand for office space. Zoning rules have blocked efforts to repurpose office buildings.

Loan Restructuring Strategies: Banks have used “extend and pretend” strategies. They restructured loans to delay addressing financial distress. This “survive till 2025” mindset has dominated the market. But the hoped-for Fed rate cuts are unlikely.

Rising Interest Rates and Mounting Debt

Treasury yields, which influence mortgage rates, have soared. Rising inflation, tariff threats, and a $36 trillion national debt have caused this. The 30-year mortgage rate hit 7.76% in November 2023. It will likely stay above 6% for a while. This has dashed hopes of refinancing. Many properties now face financial distress.²

The debt cliff looms large: $570 billion in commercial loans will mature in 2025, with nearly 40% held by banks. In 2026, $1.8 trillion in loans will mature. Borrowers may see a 75% to 100% rise in debt payments due to high interest rates. This escalates the risk of delinquencies and foreclosures.³

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Systemic Risk to Banks

Regional banks, which hold nearly 70% of CRE loans in the U.S., are particularly vulnerable. CRE loans make up 38% of loan portfolios for banks with under $10 billion in assets. For larger banks, it’s only 12.5%. Tomasz Piskorski, a real estate professor at Columbia, warns of tens of billions in potential banking losses. Regional bank failures could trigger a domino effect. It might destabilize the entire financial system. This could cause deposit outflows, forced asset sales, and systemic risk. The collapse of commercial real estate could push an already fragile banking system into total meltdown.⁵

Regulatory Challenges and Insurance Costs

Regulatory scrutiny is increasing as the crisis deepens. Meanwhile, inflation and natural disasters are raising insurance costs. This adds to the financial strain. Richard Barkham, CBRE’s chief economist, notes that high interest rates may prevent a market rebound. This could further hurt property owners and lenders.

Implications for Retirement Funds

The CRE sector’s link to the banking system means risks extend to individual retirement funds. Many retirement portfolios include commercial real estate via REITs or other financial tools. Falling property values and rising defaults could harm these investments. This threatens the retirement of millions of Americans. It could also trigger failing banks and crash the stock market.

The Road Ahead

The Counselors of Real Estate, a global group of real estate advisors, projects that financing challenges will persist. Cautious buyers and sellers will keep market activity low. Cap rates, a key metric for property investment returns, are expected to climb, signaling higher risk and lower property values. Regulatory and cost barriers make it hard to convert office space to other uses.

Conclusion

The warning signs in commercial real estate are clear. The sector’s struggles could harm the economy, the banking system, and retirement funds.
In light of these challenges, diversification strategies are more critical than ever. Gold and other precious metals have long been a hedge against economic uncertainty and inflation. As the CRE sector nears a debt cliff, gold can protect your retirement. It offers stability in a volatile market. To learn how physical precious metals held in a Gold IRA can offer long-term security, call us today at 800-462-0071.

Notes:
1. https://thedailyeconomy.org/article/the-commercial-mortgage-crisis-deepens/
2. https://www.credaily.com/briefs/2025-interest-rate-outlook-and-how-cre-is-impacted/
3. https://www.businessinsider.com/commercial-real-estate-office-interest-rates-risks-industrial-trump-2024-12
4. https://www.creanalyst.com/insights/facing-cres-maturity-wall-what-investors-need-to-know-now
5. https://www.businessinsider.com/commercial-real-estate-office-interest-rates-risks-industrial-trump-2024-12