To The Moon

ReutersLONDONMay 19-After Moody's downgraded the U.s. sovereign credit rating late Friday, the market was worried about rising U.s. debt and deficit, so Treasury Bond yields rose on Monday and U.s. stock futures fell with the U.s. dollar.

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

As Republicans get closer to passing (link) The massive tax cut package has heated unease over the US $36 trillion debt, 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 problem has not been solved," said George Lagarias, chief economist at Fovismaze. "Big Republican bills are also contributing to the rise in yields."

US 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 (link)) refuted in a television interview on SundayMoody's DowngradeRemarks, while warning trading partners that if they don't offer deals "in good faith", they will be subject to the highest tariff.

Bescent will travel to the G7 meeting this week for more talks, while US Vice President JD Vance (link) and European Commission President Ursula von der Leyen on Sunday to discuss trade issues.

Tariff uncertainty

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

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

Tariff warCrippledConsumer sentiment (link), analysts will be looking at this weekHome DepotHD.N.AndTargetTGT.N.Earnings report to understand the latest consumer trends.

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

"If the president makes Walmart take a hit, it will affect their profit margins," said Lagarias of Forvis Mazars.

"If I were an investor in the stock market, I would be looking at that rather than Moody's's () downgrade."

Global stock markets generally weakened. Euro STOXX 600STOXXIndex fell 0.5%, FrankfurtGDAXIParis,FCHIAnd LondonFTSEThe index fell between 0.1% and 0.6%.

Morgan StanleyCapital International Corp. (MSCI) Broadest Asia-Pacific Stock Index Outside Japan. MIAPJ0000PUSDown 0.4%, Japan's Nikkei. N225It fell 0.7%.

Chinese blue chips<.沪深300>It fell 0.3% as retail sales missed expectations in April, while industrial output slowed, but not as much as feared.

S&P 500 FuturesESc1Down 1.2%, Nasdaq futuresNQc1It fell 1.4%, despite a sharp rebound last week following Trump's decision to lower taxes on China.. N

U.S. interest rates aren't falling so 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 suggest a mere 40% chance of a rate cut by July and more than 95% chance by September.

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

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

Christine Lagarde, president of the European Central Bank, said in an interview published last weekend that the recent decline of the US dollar reflects people's loss of confidence in US 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 (linkAnd Portugal (linkIn the) election, the centrist performed relatively well.

EU officials said the bloc and Britain also reached interim agreements on issues including defense 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% to $3,231 an ounceXAU =。GOL/

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

Brent crude oilLCOc1Down 0.6% to $65.04 a barrel; U.S. crude oilCLc1It fell 0.5% to $62.15 a barrel.

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