European and Asian stock markets fell
Moody'sRating downgrades strengthen Treasury Bond and the US dollar
U.S. Tax Bill Passes Key Group
Reuters, London, May 19-Following Moody's downgrade of the U.S. sovereign credit rating late Friday, market concerns about rising U.S. debt and deficits led to a rise in Treasury Bond yields and a decline in U.S. stock futures along with the dollar on Monday.
European and Asian stock markets also fell, due to China (LinksMixed data shows the Chinese economy is struggling, while the White House continues to exert verbal pressure on trading partners and American businesses.
As Republicans get closer to passing (LinksThe massive tax cut plan has fueled growing unease about the U.S. $36 trillion debt, with some estimating that the plan could add $3-5 trillion in new debt over the next decade.
"What Moody's sees, plain and simple, is that the ballooning debt problem has not been addressed," said George Lagarias, chief economist at Forvismazers. "Large Republican bills are also one of the reasons for the rise in yields."
U.S. 10-year yieldUS10YT = RRIt rose 7 basis points to 4.510%. 30-year yieldUS30YT = RRIt rose above 5% for the first time since April 9, the day Trump suspended most of the so-called reciprocal tariffs for 90 days.
US Treasury Secretary Scott Bessent (LinksHe refuted this in a television interview on Sunday.Moody's downgradeThe remarks also warned trading partners that they would be subject to the highest tariffs if they did not offer deals "in good faith".
Besant will travel to the G7 meeting this week for further talks, while US Vice President JD Vance (LinksHe met with European Commission President Ursula von der Leyen on Sunday to discuss trade issues.
Tariff uncertainty
JPMorgan ChaseEconomist Michael -Ferro"Whether the 10% reciprocal tariff rate—excluding Canada and Mexico—will remain largely unchanged, or whether it will increase or decrease for certain countries, remains to be seen," said Michael Feroli, who estimates that the current effective tariff of about 13% is equivalent to a 1.2% increase in GDP.
"In addition to the disruptions caused by higher tariffs themselves, policy uncertainty will also put additional pressure on economic growth."
Tariff warWeakenedConsumer sentiment (LinksAnalysts will focus on this week.Home DepotHD.NandTargetSgt. NRead financial reports to understand the latest consumer trends.
Trump said on Saturday,WalmartWMT.NShould "eat the tariffs" (LinksThe world's largest retailer had previously stated that it would have to start raising prices due to tariffs.
"If the president lets Wal-Mart take a hit, it will affect their profit margins," said Lagarias of Forvis Mazars.
"If I were a stock market investor, I would focus on this, not Moody's downgrade."
Global stock markets generally weakened. European STOXX 600.STOXXThe index fell 0.5% in Frankfurt..GDAXIParis.FCHIand London.FTSEThe index fell by 0.1% to 0.6%.
Morgan StanleyCapital International (MSCI) is the broadest Asia-Pacific stock index outside of Japan..MIAPJ0000PUSJapan's Nikkei index fell 0.4%..N225It fell 0.7%.
Chinese blue-chip stocks<.沪深300>It fell 0.3% due to weaker-than-expected retail sales in April and a slowdown in industrial output, but the slowdown was not as severe as feared.
S&P 500 Index FuturesESc1Nasdaq index futures fell 1.2%.NQc1It fell 1.4%, despite a sharp rebound last week after Trump decided to lower tariffs on China..N
US interest rates are not falling that quickly.
The market still believes the Federal Reserve will cut interest rates by only 52 basis points this year, compared to more than 100 basis points a month ago. Futures suggest that the probability of a rate cut by July is only 40%, while the probability of a rate cut by September will exceed 95%.
Many Federal Reserve spokespeople will speak this week, including the influential New York Fed president on Monday.WilliamsAnd Vice President Philip -Jefferson。 Federal Reserve Chairman Jerome Powell will speak on Sunday.
As investors remained uneasy about the instability of U.S. trade policy, rising yields offered little comfort to the dollar, causing it to fall. The euro rose 0.7% to $1.1224EUR=EBSThe US dollar fell 0.6% to 144.85 yen.JPY=EBS。
European Central Bank President Christine Lagarde said in an interview over the weekend that the recent decline in the dollar reflects a loss of confidence in U.S. policy.
In the Romanian presidential election, a centrist candidate unexpectedly defeated a far-right anti-EU opponent, which helped euro sentiment.Links)。 In PolandLinksand Portugal (LinksIn the elections, the centrists also performed relatively well.
EU officials said the EU and Britain also reached provisional agreements on issues such as defense and security, fisheries, and youth mobility ahead of Monday's summit.Links)。
In the commodities market, gold rose again after falling nearly 4% last week. Gold rose 0.9% to $3,231 an ounceXAU=。goal/
Oil prices are in trouble due to concerns that the Organization of the Petroleum Exporting Countries (OPEC) and Iran may increase production.O/R
Brent crude oilLCOc1It fell 0.6% to $65.04 a barrel; US crude oilCLc1It fell 0.5% to $62.15 a barrel.
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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