HI Market View Commentary 05-19-2025
OK it is probably good that I am recording this webinar today
NEXT WEEK the webinar is moving to Tuesday as we have a holiday on Monday – Memorial Day
I was up ALL NIGHT last night
Credit rating lowered but where are investors going to go? Aug 2011 Standard and Poor’s lowered to Aa+, Fitch on 2023 lowered to Aa+ Then las Friday Moody’s lowered to Aa+ – Bennett Said that this was a lagging indicator
Germany has a better credit rating? = NO because of the government
Switzerland has a better credit rating? = NO because they don’t have the volume
Yes, bond funds look more attractive by 0.23% and the 30 year is back above the HOLY 5% interest !!!
Easy math but a nice number when it’s tax free for US Citizens, Companies
Future loan risk of higher interest rates
Why are we still in Mag 7 Stocks after their big loss and now the credit rating lowered? = They don’t need to borrow !!!
Let’s start with the US Budget Deficit: What the heck !!!!
Who’s deficit is this?= Trump
2025 United States federal budget
The United States federal budget for fiscal year 2025 runs from October 1, 2024 to September 30, 2025. The federal government is operating under a full-year continuing resolution passed in March 2025, which extends the 2024 budget for the whole 2025 fiscal year, with limited changes.
Source: Wikipedia
Submitted by: Joe Biden
Submitted to: 118th Congress
The fact that DOGE can cut about 1.1T and that new resources of 400B are going to border security means that DOGE may be able to lower the deficit by 600-750B
Steven Cohen: Retest April Lows and 45% chance of a recession
MetaTrading Auto-Trader thoughts
I never think an Auto trader is smart for two reasons:
It creates a taxable event “EVERY” single trade at the highest possible tax rate for an individual
Algo and Auto trading are easily messed up with volatility or news or new management or new presidents or new anything
Look at www.TrustPilot,com for all the negative and the bot positive reviews and make your own decision:
Updated Apr 28, 2025
Emotional or AI (not meeting expectations)?
Recent Update (4/28/2025) –
Since the meltdown in my account a few weeks ago, the algorithm isn’t trading – zero activity. Put a support text into Justin and team to see what has happened and what to expect. I was informed the bot would restart over the last week, at the latest, but nothing yet. Stay tuned.
BTW, I think, for those that rely on TrustPilot and that use MetaTrading, it would be good to get some collective experiences in light of what happened during the month of April 2025 in terms of responsiveness and performance. Are you seeing/experiencing what I am?
Last Update —
It appears the algorithm has stopped reacting and the account equity is down by 1/3 … rough day and the cause are the tariffs according to Metatrading’s email sent today. While news events can affect the algorithm, I’ll be in communication with Metatrading to better understand the controls and limits that can prevent this from happening again. Will update again when I have more news.
Prior Post (4/3/2025) —
Just this day, I have lost all the gains made in 2025 (made ~8% over 3 months), the algorithm went far below the stop limit I was told (7%), and now the equity is down 30+%. I’m frustrated and it appears that the people at Metatrading are not able to intervene … nor can I.
The irony is that I got engaged with Metatrading to remove the emotion and to normalize the wild swings of trading but this one day has made me more emotional … the loss is 40+%.
Not having some kind of manual override is a major concern and I cannot for the life of me understand what happened to the stop limits. I’ll post an update if there’s any recovery or if this algorithm wipes out everything … so much for the zero sum game.
Date of experience: April 03, 2025
Updated Nov 3, 2024
Lost $10K. Was encouraged to stay in when I had only lost $5K, demanded they extend their refund period, lost $5K more. Then had trouble getting my refund.
In fact, I have had to report fraud to AMEX. I’d like to see them respond to that below. Their guarantee is also a lie, as their results obviously are.
This is my first ever TrustPilot review.
Why a 5 star review? So you will read it in that section. I’ll see if I can leave one in the 1 star section as well.
This product did not operate as advertised and lost me money. They should not be in business. Recommend against. They will write a response to this, I suggest you ignore it and invest more wisely in something else.
U can see their response below now. My guess? LYING.
I was in the the thing for 3 months. It DID NOT perform as they say.
The 5 star rating in the only lie I’m telling.
Read their response below. I’m worried about fluctuations in the market? Feeling stress? Well, to hear them tell it THIS WAS BIGGER THAN THE BIGGEST DRAWDOWN THEY HAD EVER HAD. My drawdown was 20%, their historic largest one before me (unless they were…what’s the word…LYING?)…had been 11-13%. So, biggest loss in their history, take it in stride? Or was it a lie? No thank u.
Earnings
BIDU 05/21 BMO
MU 06/25 est
NVDA 05/28 est
TGT 05/21 BMO
https://www.briefing.com/the-big-picture
The Big Picture
Last Updated: 09-May-25 15:14 ET | Archive
Federal Reserve signals (more) patience on policy move
Column Summary:
*The Fed kept its key interest rate unchanged at 4.25-4.50%, maintaining a cautious stance.
*Economic uncertainty has increased; risks of higher unemployment and inflation have both risen.
*The Fed remains in “wait-and-see” mode, requiring more data before future policy changes.
The Federal Open Market Committee (FOMC) voted unanimously at its May meeting to maintain the target range for the fed funds rate at 4.25-4.50%, as was widely expected.
In a commensurate action, it was decided that the Fed will roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month and reinvest the amount of principal payments from its holdings of agency debt and agency MBS received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities. That is unchanged from its March directive.
The changes in the May directive that jumped off the page are the acknowledgments that uncertainty about the economic outlook has increased further (emphasis our own) and that the Committee “…judges that the risks of higher unemployment and high inflation have risen.”
That assessment will be construed by some as a burgeoning concern about stagflation taking hold (i.e., low growth, high inflation, and high unemployment). That is not a good environment for stocks, as low growth would translate into weaker earnings growth; meanwhile, high inflation would likely prevent the Fed from cutting rates to help jumpstart growth out of fear that the lower rates would exacerbate inflation pressures.
Briefing.com Analyst Insight
The main takeaway from this view is that it is a setup for the Fed to remain in a wait-and-see mode.
Sure enough, the main message from Fed Chair Powell’s press conference is that the Fed is in a wait-and-see mode because there is so much uncertainty around the new administration’s policies and their effect on the economy.
The reporters attending the meeting attempted repeatedly to get him to divulge the reasons for why the Fed would favor one side of its dual mandate over the other in changing policy, and each time he deftly avoided tipping the Fed’s hand, noting that the Fed simply needs to see more data.
It is the Fed Chair’s opinion, however, that policy is in a good place that allows it to be patient in waiting for more data.
He also stressed many times that the softness seen in the survey data has not yet shown up in the hard data. That’s not to say that he thinks it will, only that the Fed still hasn’t seen empirical evidence in the hard data that corroborates the drastic weakening in sentiment readings.
It will be watching for that, but Mr. Powell said the Fed thinks it can be patient because the costs of waiting to see further data are fairly low.
All in all, the Fed Chair’s views weren’t surprising at all. The lack of visibility is a universal affliction at this juncture. Fittingly, the stock market didn’t react much to the views the Fed Chair expressed at the press conference because (1) the only clear-cut view is that the Fed, like the rest of us, is waiting to see what shows up in the data, and (2) the market appreciates, somewhat begrudgingly, that’s all the Fed can do.
—Patrick J. O’Hare, Briefing.com
(Editor’s note: The next installment of The Big Picture will be posted the week of May 19.)
Where will our markets end this week?
Higher
DJIA – Bullish
SPX – Bullish
COMP – Bullish
Where Will the SPX end May 2025?
05-19-2025 +2.0%
05-12-2025 +2.0%
05-05-2025 +1.0%
Earnings:
Mon: TCOM,
Tues: JHD, PANW, TOL
Wed: LOW, TGT, VFC, SNOW, ZM, BIDU
Thur: AAP, RL, ADSK, INTU, ROST
Fri: BKE
Econ Reports:
Mon: Leading Indicators
Tue
Wed: MBA,
Thur: Initial Claims, Continuing Claims, Existing Home Sales,
Fri: New Home Sales
How am I looking to trade?
Mostly letting things run as we have since companies earnings
www.myhurleyinvestment.com = Blogsite
info@hurleyinvestments.com = Email
Questions???
Where are we going = Currently a slightly bullish trend, for the next two months stagnant to bullish and then bullish the end of the year based on trade agreements being signed
Chip Roy fires new warning as Trump’s big bill moves forward: “scam”
Story by Shane Crouche
U.S. Rep. Chip Roy (R-TX) participates in a House Judiciary Subcommittee hearing in the Rayburn House Office Building on April 1, 2025 in Washington, DC.© Kayla Bartkowski/Getty Images
Representative Chip Roy (R-TX) warned that President Donald Trump‘s vast tax and spending bill still “does not yet meet the moment” after it narrowly advanced out of a key committee during a rare Sunday night vote.
The House Budget Committee passed the reconciliation bill by 17-16 votes, but four Republican holdouts—including Roy—only voted “present.” This allowed the bill to move forward while they demonstrated their opposition to the package in its current form.
“More, it fails to end the Medicaid money laundering scam and perverse funding structure that provides seven times more federal dollars for each dollar of state spending for the able-bodied relative to the vulnerable.
“This all ultimately increases the likelihood of continuing deficits and non-Obamacare-expansion states like Texas expanding in the future. We can and must do better before we pass the final product.”
Speaker Mike Johnson (R-LA) met with Republican lawmakers shortly before the meeting and acknowledged to reporters that there are still details to “iron out.” He said some changes were being made but declined to provide details.
It’s all setting up a difficult week ahead for the GOP leadership racing toward a Memorial Day deadline, a week away, to pass the package from the House.
The path ahead for Johnson is unclear as he tries to hold his narrow House majority together to pass the president’s top domestic priority of extending the tax breaks while pumping in money for border security and deportations—all while cutting spending.
Speaker Johnson must now reconcile the remaining differences with the Republican holdouts in order to pass the bill through the House with his small majority of just three. He has set a deadline of Memorial Day for the passage of the bill.
This article includes reporting by The Associated Press.
White House announces $600 billion Saudi investment in U.S. during Trump visit
Published Tue, May 13 20259:56 AM EDTUpdated Tue, May 13 20253:34 PM EDT
Kevin Breuninger@KevinWilliamB
Key Points
- President Donald Trump spoke at a U.S.-Saudi investment forum in Riyadh.
- The White House announced Saudi Arabia’s commitment to invest $600 billion in a series of deals with the U.S.
- Trump said during the speech that he will order the cessation of sanctions against Syria.
President Donald Trump on Tuesday praised Saudi Arabia and its leaders after the White House announced a commitment by the kingdom to invest $600 billion in a series of deals with the U.S.
Trump also announced at an investment forum in Riyadh that he will order the removal of all U.S. sanctions against Syria, “in order to give them a chance at greatness.”
Trump’s speech at the investment conference followed him signing several bilateral agreements during a state visit with Saudi Crown Prince Mohammed bin Salman.
Among the agreements secured is a nearly $142 billion defense sales deal, providing the kingdom with “state-of-the-art warfighting equipment and services from over a dozen U.S. defense firms,” the White House said.
That commitment is nearly double Saudi Arabia’s 2025 defense budget, which totaled $78 billion. The White House’s announcement does not say when the defense deal is expected to conclude.
Bin Salman, who spoke before Trump at the investment conference, said the aim is to raise the U.S.-Saudi partnership to $1 trillion across the military, security, economic and technological sectors.
Economists point out that making good on that investment pledge will be a challenge for the kingdom, which faces sky-high costs for its own Vision 2030 investment ambitions.
Lower global oil prices and big-ticket public spending projects have brought about widening budget deficits for Riyadh.
The White House also announced commitments from Saudi digital infrastructure business DataVolt to pursue a $20 billion investment in artificial intelligence data centers in the U.S.
The total investment figure also includes a combined $80 billion in commitments from DataVolt, Google, Oracle, Salesforce, AMD and Uber to invest in both the U.S. and Saudi Arabia, according to the White House.
Tom Lee sees a ‘V-shaped’ recovery and getting long these ‘washed out’ stocks
Published Mon, May 12 20252:57 PM EDT
With stocks on the path toward a “V”-shaped recovery, Fundstrat co-founder Tom Lee sees a handful of names worth grabbing.
Stocks have staged a recovery rally since selling off on the initial unveiling of President Donald Trump’s plan for steep tariffs last month. The latest leg up came on Monday after the U.S. and China agree to slash tariffs for 90 days following weekend trade negotiations.
“Equities have staged a V-shaped recovery, which is what we argued would take place as this is the pattern after a waterfall decline in stocks,” Lee wrote to clients in a Monday note. “And despite the continued improving news flow, investors remain skeptical, which is positive.”
The S&P 500 briefly dipped into bear-market territory — which marks a decline of at least 20% from a recent high — amid the initial bout of panic selling. Now, the broad index is up more than 2% since April 2, when Trump first unveiled the broad levies.
Lee told CNBC on Monday that the market’s movement in a “waterfall” formation after the tariff announcement signaled a “V”-shaped recovery would be ahead. That’s because most waterfall slides historically in the market give way to a “V” rather than a “W,” which would mean stocks might be in for another significant decline.
“The stock market did have a liquidation event,” Lee said on CNBC’s “Power Lunch.” “But waterfall declines — all …17 out of 18 since 1950 — had a V-shaped recovery. So we knew that whenever the bottom was established, the bottom would be a V shape.”
Despite these reasons for optimism, Lee noted that traders continue to show high levels of pessimism. He pointed to the American Association of Individual Investors’ sentiment survey, which last showed more than 51% of members being bearish of the stock market over the next half-year.
“At some point, the macro skeptics will have to acknowledge that conditions are improving,” he wrote to clients. “Markets can look through a weak quarter or two due to trade disruptions.”
‘Washed out’ plays
With confirmation signals favoring the “V”-shaped recovery and the bull market showing it can stay intact, Lee compiled a list of “washed out” large-cap stocks that investors can consider picking up amid the rebound.
The idea is that equities likely saw most of the pain between mid-February and early April, so investors should look for names that struggled before the tariff-induced plunge. Tariffs may have just given stocks the final leg down to reset and then recover, he said.
To find these picks, Lee screened for stocks with market caps above $15 billion that declined more than 30% before Feb. 18. Mid-February was the last time the S&P 500 traded at all-time highs.
He then looked for stocks that didn’t make new closing lows between April 1 and 8, the period containing Trump’s initial announcement that sent stocks cratering. Stocks must also be currently down more than 25% from respective 52-week highs to make the list.
Here’s 10 large-cap names that made the cut:
‘Washed out’ stocks
| Ticker | Stock |
| WBD | Warner Bros. Discovery |
| LULU | Lululemon |
| TSLA | Tesla |
| DLTR | Dollar Tree |
| UAL | United Airlines |
| TEAM | Atlassian |
| HUBS | HubSpor |
| SMCI | Super Micro Computer |
| EIX | Edison International |
| VST | Vistra |
Source: Fundstrat
Lululemon was one name that met the criteria. The athletic wear retailer has tumbled more than 21% in 2025, but surged more than 7% amid Monday’s rally.
The majority of analysts polled by LSEG have buy ratings on the stock. The typical price target implies shares can gain 11.5% over the next year.
Elsewhere, Super Micro Computer was one of several tech stocks on the list. Super Micro shares have jumped nearly 10% despite 2025′s rough start, helped in part by Monday’s gain of more than 4%.
The typical analyst has a hold rating on the stock, per LSEG. However, the average price target reflects the potential for shares to run up more than 20%.
House Republicans advance Trump’s tax bill — but ‘SALT’ deduction still undecided
Published Wed, May 14 202510:24 AM EDTUpdated Wed, May 14 20251:58 PM EDT
Kate Dore, CFP®, EA@in/katedore/
Key Points
- House Ways and Means Republicans on Wednesday advanced trillions of tax breaks as part of President Donald Trump’s economic package.
- But the battle over the deduction for state and local taxes, known as SALT, remains in limbo.
- The text released Monday afternoon would raise the SALT cap to $30,000 for most Americans. But some lawmakers want a higher limit before the full House vote.
House Republicans have advanced trillions of tax breaks as part of President Donald Trump’s economic package.
After debating the legislation overnight, the House Ways and Means Committee, which oversees taxes, passed its portion of the legislation on Wednesday morning in a 26-19 party-line vote.
But the battle over the deduction for state and local taxes, known as SALT, remains in limbo.
The text released Monday afternoon would raise the SALT cap to $30,000 for those with a modified adjusted gross income of $400,000 or less. But some House lawmakers still want to see a higher limit before the full House vote.
While the SALT deduction is a key priority for certain lawmakers in high-tax states, the current $10,000 cap was added to help fund the Tax Cuts and Jobs Act, or TCJA, of 2017.
Following the vote, House Ways and Means Committee Chairman Jason Smith, R-Mo., said in a statement that Ways and Means Republicans will “continue to work closely with President Trump and our House colleagues to get the One, Big, Beautiful Bill that delivers on the President’s agenda to his desk as soon as possible.”
The full House vote may come as early as next week. But the legislation could see significant changes in the Senate, experts say.
House Republicans’ proposed tax cuts
The House Ways and Means Committee legislation includes several of Trump’s campaign priorities, including extensions of tax breaks enacted via the TCJA.
If enacted as drafted, Republicans could also deliver no tax on tips and tax-free overtime pay. But questions remain about the details of these provisions.
Rather than cutting taxes on Social Security, the plan includes an extra $4,000 deduction for older Americans, which may not fully cover Social Security income, according to some experts.
The $4,000 deduction costs $90 billion over 10 years, compared with $1 trillion for exempting Social Security income from tax, Garrett Watson, director of policy analysis at the Tax Foundation, wrote in a post Tuesday on X.
“Tax filers with no other income sources outside of Social Security would typically see little benefit, while others may see bigger gains from this idea,” he wrote in that thread.
Rep. Mike Lawler: President Trump fully supports lifting the cap on SALT Tax
The House Ways and Means bill also extends the maximum child tax credit of $2,000 enacted via the TCJA, and temporarily raises the tax break to $2,500 per child through 2028.
However, some policy experts have criticized the proposed credit design since lower earners typically can’t claim the full amount.
The proposed legislation “did nothing for the 17 million children that are left out of the current $2,000 credit,” Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities’ federal fiscal policy division, told CNBC.
https://www.cnbc.com/2025/05/13/cpi-inflation-breakdown-april-2025-in-one-chart.html
Here’s the inflation breakdown for April 2025 — in one chart
Published Tue, May 13 202510:36 AM EDTUpdated Tue, May 13 20251:04 PM EDT
Key Points
- The consumer price index declined to 2.3% in April from 12 months earlier, the lowest reading since February 2021.
- However, tariffs levied by President Donald Trump are expected to reignite inflation as soon as next month, according to economists.
- Prices declined for categories like gasoline, groceries, apparel, used cars and airline fares during the month from March to April, according to CPI data.
Inflation retreated again in April on the back of lower prices for consumer staples like groceries and gasoline, and other items such as used cars and clothing.
The consumer price index, a key inflation gauge, rose 2.3% in April from 12 months earlier, down from 2.4% in March, the Bureau of Labor Statistics reported Tuesday.
It was the smallest annual increase since February 2021, just before pandemic-era inflation started to pop.
However, economists warn it’s not a matter of if, but when, tariffs levied by President Donald Trump start to reignite inflation, at a time when it has nearly been tamed from pandemic-era highs.
“It felt like we could just about declare victory on putting inflation back in the bottle, and it’s back out again,” said Mark Zandi, chief economist at Moody’s.
He expects tariffs to start noticeably impacting inflation in the May CPI report issued next month.
“Soak this report in,” Zandi said. “It’ll be a while before we get another good one.”
How tariffs may affect inflation
Tariffs are a tax on imports from foreign nations, paid by U.S. companies that import the good or service. Businesses negatively affected are expected to pass on at least some of that additional cost to consumers via higher prices.
Trump has imposed — and removed or delayed — tariffs in several tranches during his second term.
Tariff policies currently in effect would cost the average U.S. household an extra $2,800 over the “short run,” according to a Yale Budget Lab report issued Monday. (It doesn’t specify a time frame.)
The speed at which companies raise prices will vary, economists said.
Some may not want to raise them immediately, to avoid alienating consumers. Others may have ample inventory, and can avoid raising prices until their nontariffed inventory runs low. Some may try to raise prices prematurely, in anticipation of higher costs.
A 10% average tariff rate would add as much as 1 percentage point to the consumer price index after about six to nine months, said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics.
That average rate is a “reasonable” guess, given current policy, he said.
Currently, there’s a 10% baseline tariff on most U.S. trading partners, and a higher rate on China of at least 30%. There are also 25% duties on specific products like steel, aluminum, and some automobiles and auto parts, and on certain goods from Canada and Mexico.
Of course, it’s unclear where policy will ultimately land.
Even after a temporary trade deal with China announced Monday, the “core” CPI inflation will still rise to 3.5% by the end of 2025, Stephen Brown, deputy chief North America economist at Capital Economics, wrote in a note Tuesday.
Core inflation — which strips out energy and food prices, which can be volatile categories — was at 2.8% in April.
“I think tariffs are the biggest question mark over the inflation outlook,” said Sarah House, a senior economist at Wells Fargo Economics.
“There’s all this tremendous trade uncertainty and we have higher tariffs pretty much across everything we import,” she added.
‘Signs of tariff effects’ in the CPI
There may have been “some signs of tariff effects” in the CPI report, Brown of Capital Economics wrote.
For example, there was a nearly 9% jump in audio equipment prices and a 2.2% increase in photographic equipment prices just in the month from March to April, according to Brown’s note.
However, “the overall tariff impact was muted,” signaled by a relatively low 0.1% increase in goods prices for the month, he wrote.
Tariff effects are going to show up in next month’s CPI data, says Morgan Stanley’s Ellen Zentner
Meanwhile, gasoline prices fell slightly — by 0.1% from March to April — on a seasonally adjusted basis, according to the CPI data. They’re down 12% for the year.
Gasoline prices have fallen (or, deflated) in recent months alongside those of oil, from which gasoline is refined. Oil prices have declined amid fear of recession, which would mean lower demand for oil, and greater supply.
Grocery prices also declined for the month, by 0.4%. Lower fuel costs can translate to reduced costs for transportation of food from farm to store shelves, economists said. A “sharp” monthly fall in egg prices — a 13% decline — also contributed, Brown wrote.
Prices for used cars and trucks also declined, by 0.5% for the month, as did those for apparel (-0.2%) and airline fares (-2.8%).
Inflation for housing, the largest CPI component, has also tamed though remains elevated, at 4% annually.
Broadly, CPI inflation for “services” has gradually declined due to a combination of housing; a weaker labor market in which workers aren’t quitting their jobs as frequently and businesses don’t have to raise wages rapidly; and a lagged effect of “calmer” goods inflation, House said.
30-year Treasury yield jumps above 5% after Moody’s downgrades U.S. credit rating
Published Mon, May 19 20255:02 AM EDT
In this article
U.S. Treasury yields spiked on Monday after Moody’s downgraded the U.S.′ credit rating, causing investors to dump bonds. Rates hit key levels that have pressured financial markets recently.
The 30-year Treasury yield was up 13 basis points to 5.03%. The 10-year yield climbed 11 basis points to reach 4.552%. Meanwhile, the 2-year Treasury yield was up 4 basis points, reaching 4.021%.
One basis point is equivalent to 0.01%, and yields and prices move in opposite directions.
| Symbol | Company | Yield | Change |
| US10Y | U.S. 10 Year Treasury | 4.548% | +0.109 |
| US1M | U.S. 1 Month Treasury | 4.303% | +0.005 |
| US1Y | U.S. 1 Year Treasury | 4.138% | +0.01 |
| US2Y | U.S. 2 Year Treasury | 4.015% | +0.032 |
| US30Y | U.S. 30 Year Treasury | 5.025% | +0.128 |
| US3M | U.S. 3 Month Treasury | 4.353% | -0.001 |
| US6M | U.S. 6 Month Treasury | 4.277% | +0.008 |
Investor concerns mounted after the rating agency Moody’s slashed the U.S.′ credit rating on Friday, bringing it down one notch from Aaa — the highest score — to Aa1. The agency attributed the downgrade to the increasing burden of financing the government’s budget deficit as well as the high cost of rolling over existing debt amid high interest rates.
“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” it said in a statement.
Moody’s has assigned a “country ceiling rating” of Aaa to the U.S. since 1949. To be sure, it’s now in line with all the major credit rating agencies which had already given the U.S. their second-highest available rating.
“This is a major symbolic move as Moody’s were the last of the major rating agencies to have the U.S. at the top rating,” Deutsche Bank analysts said in a note.
In April, Treasury yields jumped after U.S. President Donald Trump implemented sweeping “reciprocal tariffs” on international trade partners. The 10-year yield moved above 4.5% and the 30-year rate hit 5%, causing the Trump administration to back off the stiffest tariffs on fears they was causing a financial panic and would raise rates for consumers.
But now following the move by Moody’s, the long-term Treasury yields have returned to these levels. Loans for houses, cars and credit cards track these rates. Stock futures were lower as yields surged, with Dow futures down more than 300 points early Monday.
House Republicans were pushing ahead with Trump’s tax and spending bill this week, with the legislation making it past the House Budget Committee Sunday evening. The bill, however, is estimated to add trillions to the budget deficit.
Moody’s warned about the lack of the country’s fiscal restraint in its downgrade: “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
“With tax cuts and tariffs hanging in the balance, Moody’s appears to be sending a message that it thinks these policy changes will, on net, put the US on an even worse fiscal trajectory,” wrote Bank of America economist Aditya Bhave in a note. “That is, tariff revenues won’t fully offset the cost of the proposed tax bill. We agree.”
Concerns about tariffs and the U.S. debt burden are raising questions about whether Treasurys are still a safe haven asset for global investors.
Investors will also keep an eye out for speeches from U.S. central bank officials on Monday, including Atlanta Federal Reserve President Raphael Bostic, New York Fed President John Williams, and Dallas Fed President Lorie Logan.
