Jim Cramer Says Bonds Will 'Overshoot And Then Settle,' Predicts Turbocharged Economy From Budget Agreement

Jim Cramer wrote on X Wednesday that bonds will “overshoot and then settle,” predicting that a turbocharged economy could emerge from the current budget agreement despite near-term market volatility.

What Happened: “Bonds will overshoot and then settle. They will get to a level that brings in actual buyers and then we will have a turbocharged economy from that budget agreement. We just can’t believe any of that right now. But it is possible,” CNBC’s Cramer posted on X.

His comments came as Treasury yields spiked to multi-month highs Wednesday, with the 30-year bond yield hitting 5.08% – the highest level since October 2023. The benchmark 10-year Treasury note yield traded at 4.59%, while the 2-year yield reached 4.00%.

The bond market selloff accelerated following a weak $16 billion 20-year Treasury auction that showed soft demand. The bid-to-cover ratio came in at 2.46, sitting near the bottom quartile of the last 50 auctions, according to Exante Data analysis.

The yield surge triggered broad equity weakness, with the Dow Jones Industrial Average losing 816.80 points or 1.91% to 41,860.44. The S&P 500 shed 1.61% to 5,844.61, while the Nasdaq Composite dropped 1.41% to 18,872.64.

High-growth tech stocks, including NVIDIA Corp. NVDA, Palantir Technologies Inc. PLTR, and Coinbase Global Inc. COIN fell over 2.5% during the Treasury market spike.

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See Also: Trump Considers Taking Fannie Mae, Freddie Mac Public, Calls Mortgage Giants ‘Very Profitable,’ Says Timing Seems Right

Why It Matters: Market participants remain focused on fiscal policy under President Donald Trump‘s administration, with the proposed tax-and-spending package potentially slashing federal revenues by $4.1 trillion through 2034, according to the Tax Foundation.

Economist Justin Wolfers criticized the bill as “reverse Robin Hood,” while Moody’s recent sovereign debt downgrade amplified existing fiscal sustainability concerns.

“Budget deficits matter,” said veteran investor Ed Yardeni. “That’s especially so when they lead to higher interest rates, higher bond yields, and potentially higher inflation.”

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.