Bond yields have spiked this week on investor concern over the tax bill swelling the US deficit. Here's why markets are worried.

Republican tax bill could cost $3.8 trillion over 10 years as its tax cuts surpass spending reductions, according to one analysis.

Financial markets are looking for more “fiscal discipline” from Washington, a top official at the Federal Reserve warned.

London equities fell on Thursday in broad-based declines as concerns over a deteriorating fiscal outlook in the U.S. and higher-than-expected UK government budget deficit dampened investor sentiment.

Wall Street saw one of its most brutal selling sessions overnight in over a month as rising deficit worries led to a spike in bond yields, which in turn hit sentiment around equities. The run-up seen from lower levels also was a big factor in investors choosing to take money off the table as uncertainties rose.

President Trump promised to expand tax cuts while also slashing federal spending. So far, the math in Congress looks like a recipe for federal deficits to keep rising.

The U.S. government posted a $258 billion budget surplus for April, up 23%, or about $49 billion, from a year earlier, reflecting strong tax receipts in the final month of the tax season and record collections of import duties,

China’s fiscal stimulus pushed its four-month budget deficit to a record high, as the government ramped up support for the economy during an escalation in its trade conflict with the US.The broad deficit reached 2.