To The Moon

ReutersLONDON May 19-U.S. stock futures slipped with the dollar as Treasury Bond yields rose on Monday amid concerns about rising U.S. debt and deficits after Moody's downgraded the country's sovereign credit rating late Friday.

European and Asian stocks also fell as China (link), mixed data showed China's economy was struggling, while the White House continued to exert rhetorical pressure on trading partners and U.S. businesses.

As Republicans get closer to passing (linkUnease over $36 trillion in US debt has risen, with some estimating that it could add $3-5 trillion in new debt over the next decade.

"What Moody's is seeing, plain and simple, is that the ballooning debt problem is not being solved," said George Lagarias, chief economist at Forbes Mazars. "The big Republican bill is also contributing to the rise in yields."

U.S. 10-Year YieldUS10YT = RRup seven 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.

Treasury Secretary Scott Bessent (link)) refuted in a television interview on SundayMoody's downgradeComments, while warning trading partners that if they do not offer deals "in good faith", they will be subject to maximum tariffs.

Mr. Basent is heading to the G7 meeting this week for more talks, while U.S. Vice President JD Vance (link) and European Commission President Ursula von der Leyen met Sunday to discuss trade issues.

Tariff uncertainty

JPMorgan ChaseEconomist Michael-Ferro"It remains to be seen whether the reciprocal rate of 10 percent — excluding Canada and Mexico — will remain broadly the same or whether there will be increases or decreases for some countries," said Michael Feroli, who estimated that the current effective tariff of about 13 percent would be equivalent to a tax increase of 1.2 percent to GDP.

"In addition to the disruption of higher tariffs themselves, policy uncertainty can also put additional pressure on economic growth."

Tariff WarweakenedConsumer sentiment (link), analysts will be watching this weekHome DepotHD.NAndTargetTGT.NEarnings report to stay up-to-date on consumer trends.

Trump said Saturday,WalmartWMT.NShould "eat the tariff" (link), after the world's largest retailer said it would have to start raising prices due to tariffs.

"If the president lets Wal-Mart take the blow, it will affect their profit margins," said Lagarias of Forvis Mazars.

"If I were an investor in the stock market, I would focus on this rather than Moody's () downgrade."

Global stock markets generally weakened. European STOXX 600. STOXXIndex down 0.5%, Frankfurt. GDAXIParis. FCHIAnd London. FTSEThe index fell between 0.1% and 0.6%.

Morgan StanleyCapital International Inc.'s (MSCI) broadest index of Asia-Pacific stocks outside Japan. MIAPJ0000PUSdown 0.4%, Japan's Nikkei. N225down 0.7%.

Chinese blue chip stocks<.沪深300>It fell 0.3% as retail sales fell short of expectations in April and industrial output slowed, but not as much as feared.

S&P 500 futuresESc1down 1.2%, Nasdaq futuresNQc1down 1.4%, despite a sharp rebound last week following Trump's decision to lower taxes on China.. N

US interest rates are not falling as fast

Markets still see the Fed cutting interest rates by just 52 basis points this year, compared with more than 100 basis points a month ago. Futures hinted at just a 40% chance of cutting rates by July, and more than 95% chance of cutting rates by September.

There are a number of Fed speakers set to speak this week, including the influential New York Fed president on MondayWilliamsAnd vice-chairman Philip-Jefferson。 Federal Reserve Chairman Powell will speak on Sunday.

The dollar fell as investors remained uneasy about the volatility of U.S. trade policy, and the rise in yields did little comfort to the dollar. The euro rose 0.7% to $1.1224EUR = EBSThe US dollar fell 0.6% to 144.85 yenJPY = EBS。

European Central Bank President Christine Lagarde said in an interview published over the weekend that the recent decline in the dollar reflected a loss of confidence in U.S. policy.

Euro sentiment was helped by the surprise victory of centrist candidates over far-right anti-EU opponents in Romania's presidential election (link)。 In Poland (link) and Portugal (link), the centrists also fared relatively well in the election.

EU officials said the EU and Britain also reached tentative agreements on issues such as defence and security, fisheries and youth mobility ahead of Monday's summit.link)。

In commodity markets, gold rose again after falling nearly 4% last week. Gold rose 0.9% at $3,231 an ounceXAU =。GOL/

Oil prices are struggling amid concerns that the Organization of Petroleum Exporting Countries (OPEC) and Iran may increase production.O/R

Brent crude oilLCOc1down 0.6% to $65.04 a barrel; U.S. crude oilCLc1down 0.5% to $62.15 a barrel.

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