LONDON - Treasury yields rose and US stock futures slipped with the dollar on Monday due to concerns about US debt and rising deficits after Moody's downgraded its US sovereign credit rating late on Friday.

European and Asian shares also fell as the White House kept up rhetorical pressure on trade partners and American businesses.

Unease over the United States' $36 trillion of debt mounted as Republicans got closer to passing a sprawling package of tax cuts, which some estimate could add $3-5 trillion in new debt over the next decade.

"What Moody's sees, plain and simple, is that the ballooning debt is not being addressed," said George Lagarias, chief economist at Forvis Mazars. "The Republican mega bill is also contributing to rising yields."

The US 10-year yield rose 7 basis points to 4.510 percent. The 30-year yield rose above 5 percent for the first time since April 9, the day Trump paused most of his so-called reciprocal tariffs for 90 days.

US Treasury Secretary Scott Bessent used television interviews on Sunday to dismiss the Moody's downgrade, while warning trade partners they would get maximum tariffs if they did not offer deals in "good faith".

Bessent heads to a G7 meeting this week for more talks, while US Vice-President JD Vance and European Commission President Ursula von der Leyen met on Sunday to discuss trade.

Tariff uncertainty

"It remains to be seen whether the 10 percent reciprocal rate - excluding Canada and Mexico - will broadly remain, or will go up or down for some countries," said JPMorgan economist Michael Feroli, who estimates the current effective tariff of around 13 percent was equivalent to a tax rise worth 1.2 percent of GDP.

"Beyond disruptions from higher tariffs themselves, policy uncertainty should additionally weigh on growth."

The tariff war has sapped consumer sentiment and analysts will be scouring earnings from Home Depot and Target this week for an update on spending trends.

Trump said on Saturday that Walmart should "eat the tariffs" after the world's largest retailer said it would have to start raising prices due to the levies.

"If the president makes Walmart take the hit, that will impact their margins. It will impact the margins of a lot of other companies," Forvis Mazars' Lagarias said.

"If I was in the equity market, that's what I'd be looking at, not the (Moody's) downgrade."

Global shares were broadly weaker. Europe's STOXX 600 was down 0.5 percent, while indexes in Frankfurt, Paris and London were lower between 0.1 percent and 0.6 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.4 percent, with Japan's Nikkei down 0.7 percent.

S&P 500 futures slid 1.2 percent and Nasdaq futures 1.4 percent, though that followed major rallies last week in the wake of Trump's decision to lower levies on China.

US rates not falling so fast

Markets are still pricing in only 52 basis points of Federal Reserve rate cuts this year, compared to more than 100 basis points a month ago. Futures imply just a 40 percent chance of a move by July, rising to over 95 percent by September.

A host of Fed speakers are on the diary this week, including influential New York Fed President John Williams and Vice-Chair Philip Jefferson on Monday. Fed Chair Jerome Powell is due to speak on Sunday.

Higher yields offered little comfort to the dollar, which fell as investors remain uneasy with the volatility of US trade policy. The euro rose 0.7 percent to $1.1224, while the dollar slipped 0.6 percent to 144.85 yen.

In an interview published over the weekend, European Central Bank President Christine Lagarde said the dollar's recent decline reflected a loss of confidence in US policies.

Euro sentiment was aided by a surprise victory for the centrist candidate in Romania's presidential election over a far-right anti-EU opponent. The center also fared relatively well in elections in Poland and Portugal.

The EU and Britain also reached a tentative agreement on defence and security, fisheries and youth mobility ahead of a summit on Monday, EU officials said.

In commodity markets, gold was on the rise again after shedding almost 4 percent last week. It traded 0.9 percent firmer at $3,231 an ounce.

Oil prices struggled on concerns about potential increased output from OPEC and Iran.

Brent dropped 0.6 percent to $65.04 a barrel, while US crude eased 0.5 percent to $62.15 per barrel.