The Republican-led House passed President Trump’s tax bill early Thursday, after party leaders made a series of last-minute changes that united their warring wings.

Treasury yields are back to where they started the year, but this rise doesn’t signal panic, but a fundamental change in markets, writes Greg Ip for The Wall Street Journal.

Treasury yields are rising because financial-market participants are concerned that there won’t be any meaningful near-term effort to reduce budget deficits, Federal Reserve governor Christopher Waller said Thursday.

With the U.S. economy already close to full capacity, more borrowing adds to inflationary pressure, and could lead the Fed to keep interest rates higher for longer, writes James Mackintosh for WSJ.

And the Fed's overnight lending operations will likely grow in importance as the central bank’s balance sheet continues to shrink, a top Fed markets official said Thursday.

Please note: The Central Banking newsletter won’t be published Monday in observance of Memorial Day. We’ll see you back here Tuesday.

Let’s put the bond turmoil in perspective. At 4.55%, the 10-year Treasury yield is back to where it started the year, and still below the 5% hit in the fall of 2023.

So this week’s rise in yields does not signal panic, prelude to a crisis or a lender’s strike.

But it matters. It adds to the evidence that something fundamental has changed in the financial markets, writes the WSJ's Greg Ip. The prepandemic era, when too much savings chased too few bonds, is over. Governments must pay up, and big budget deficits are more dangerous.

The trend is global, but the U.S. is an especially big piece of the story because of annual deficits likely to top $2 trillion on the way to $3 trillion, and the potential erosion of the dollar’s reserve status.

• The Bond Market Is Waking Up to the Fiscal Mess in Washington

The Republican-led House passed President Trump’s tax-and-spending bill, a major win for Trump and House Speaker Mike Johnson. The vote was 215 to 214, with one lawmaker voting present. The measure now goes to the Senate, where a similar tug of war could play out.

• Trump’s ‘Big, Beautiful Bill’ Heads to Senate, Where New Fights Loom

In an interview with Barron’s on Thursday, Collins, a voting member of the Federal Open Market Committee this year, said her latest outlook includes higher inflation and slower growth, due in part to tariffs.

She told Barron’s that she sees no cuts in 2025 as a possibility. She said that maintaining a “moderately restrictive” stance may be warranted for longer than previously expected, especially if inflation pressures persist and the labor market remains strong. (Barron's)

• A Crypto Billionaire Who Feared Arrest in the U.S. Returns for Dinner With Trump

8:30 a.m.: FRB St. Louis President Alberto Musalem and FRB Kansas City President Jeffrey Schmid speak at Northwest Arkansas Fireside Chat event
10 a.m.: New Residential Sales

2:45 p.m.: Federal Reserve Chair Jerome Powell speaks at Princeton University Baccalaureate Ceremony

Renewed concerns over the growing U.S. government debt pile appear to have prompted bitcoin's recent rise to new records, but investors should exercise caution in buying the cryptocurrency, Hargreaves Lansdown analyst Susannah Streeter says in a note. "Investors should be wary about jumping onto the crypto rollercoaster as bitcoin has a tendency to fall sharply following rapid ascents." People should only invest money they can afford to lose, she says. The House passed President Trump's tax bill Thursday after last-minute changes by Republican leaders. The proposal has fueled concerns over rising U.S. debt, encouraging investors to seek dollar alternatives and boosting bitcoin. — Renae Dyer

India's central bank will likely cut rates three more times by the end of 2025, the ANZ Research team says in a note. Given that inflation isn't a concern for now, currently subdued economic growth may mean that the RBI will need to continue monetary easing, they write. If the January-March GDP print misses expectations, the RBI may have to downgrade its 6.5% growth forecast for the current fiscal year, they add. The impact of tariffs on external demand is difficult to assess, despite positive developments from ongoing negotiations between the U.S. and China, and a few more months of data is needed before revising ANZ's growth forecast for India, they add. — Kimberley Kao

Japan's hotter-than-expected core inflation boosts odds of a Bank of Japan rate hike in July, ING's Min Joo Kang says in a research report. Consumer prices excluding fresh food rose 3.5% in April from a year earlier, up from March's 3.2% increase, and exceeded market consensus of a 3.4% increase, the senior economist for South Korea and Japan notes. Excluding fresh food and energy, core-core CPI rose 3.0% on year in April, which suggests underlying inflation will remain above the BOJ's target of 2.0%, the economist says. After a potential 25bp rate hike in July, the BOJ may stand pat for a considerable time owing to high uncertainty surrounding U.S. tariffs, the economist adds. — Ronnie Harui

• Finance officials from some of the world’s most powerful nations glossed over simmering tensions triggered by President Trump’s far-reaching tariffs during an economic summit in this small ski town.
• Bank of Canada Gov. Tiff Macklem said Thursday the economy risks weakening further unless there is a relatively quick resolution to the U.S.-Canada trade conflict.
• Wages in the eurozone rose at a much slower pace during the three months through March even as the unemployment rate remained at a record low, opening the way for further cuts to borrowing costs by the European Central Bank.
• Germany’s economic growth at the start of the year was faster than previously reported, as exports and manufacturing jumped on the back of U.S. firms stockpiling goods ahead of President Trump’s tariffs.
• Pessimism among U.K. consumers faded a little this month, likely a result of the rollback of some of U.S. trade tariffs and the Bank of England’s most recent interest-rate cut, a survey published Friday said.
• U.K. retail sales jumped higher than expected last month, a result of warmer weather that helped food stores bounce back. Retail sales volumes climbed 1.2% on month in April after a 0.1% rise in March, the Office for National Statistics said Friday.
• Japan’s consumer inflation gathered pace in April due to higher energy and food prices, although it is unclear if this will pave the way for more monetary tightening by the Bank of Japan.

A more humanlike generation of customer-service voice bots is here, spurred by advances in artificial intelligence and a flood of cash.

PepsiCo is pushing back its climate goals. Its sustainability chief says the world “was a very different place” when it set its targets.

An AI-generated PR pitch succeeded in generating attention—and hostility.

Former audit regulators, academics and investors are preparing to fight the proposed elimination of an accounting oversight board created after Enron.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.