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Investors weigh US fiscal concerns as stocks fall and Treasury yields rise
On Tuesday, major stock indexes declined while yields on longer-dated U.S. Treasury bonds increased. Investors were focused on U.S. financial concerns as Congress discussed a bill to cut taxes. The S&P 500 Snapped a six-day Streak of gains The U.S. president Donald Trump tried to get his fellow Republicans to support the bill. However, he struggled to persuade a few holdouts. This package would, among other things, extend his 2017 tax cuts. Investors are concerned that the bill could lead to a higher budget deficit in the United States than expected. Moody's Investors Service lowered the U.S. Credit Rating late Friday night, causing investors to worry about the debt burden of the country. "With the Republican Bill still in the air, it's just enough to make people a bit more cautious, and maybe use this recent rally to trim a bit of their portfolio," said Rick Meckler. The Dow Jones Industrial Average dropped 114.83 or 0.27% to 42,677.24. The S&P500 fell 23.14 points or 0.39% to 5,940.46 while the Nasdaq Composite dropped 72.75 points or 0.38% to 19,142.71. Meckler added that investors are also reevaluating the recent rally, and taking into consideration the possible fallout of the changes in U.S. Tariff Policy. Home Depot shares closed down 0.6% despite the fact that Wall Street expectations for first-quarter revenue were exceeded. The MSCI index of global stocks fell by 0.77 points or 0.09% to 816.72. European stocks closed at nine-week highs with telecom and utilities companies leading the gains. The pan-European STOXX 600 rose by 0.73%. The yields on longer-dated U.S. Treasury bonds have risen amid U.S. financial concerns. The 10-year benchmark yield in the United States rose by 0.2 basis points, to 4.477%. The 30-year bond rate rose 2.3 basis points to 4.965%. In intraday trading on Monday, it reached 5.037%, its highest level since November 2023. The yields of Japanese government bonds with a super-long maturity date reached all-time records on Tuesday. This was a result of a disappointing auction of securities with a 20-year maturity. The Japanese yield on the 20-year bond jumped up to 15 basis points, reaching 2.555%. This is its highest level since 2000. And, for the 30-year bond, it reached a new record of 3.14%. Dollar fell again due to more cautious comments by Federal Reserve officials about the economy. Alberto Musalem, President of the St. Louis Federal Reserve Bank, said that despite recent ease in U.S. China trade tensions the labor market is likely to weaken, and prices are expected to rise. By the end of the year 2025, traders expect the Fed to cut rates by at least 25 basis points. The dollar dropped against the yen and reached a two-week low at 144.095 yen. It then traded down 0.2% to 144.495, slipping in five out of the six sessions. The Aussie Dollar was down last 0.6% to US$0.6416, after the Reserve Bank of Australia lowered benchmark interest rates by a further 25 basis points. In Canada, inflation eased in April to 1.7%, which was higher than the 1.6% economists expected. The oil price has remained stable amid the uncertainty surrounding U.S.-Iran talks and Russia-Ukraine negotiations. Brent futures fell 16 cents or 0.2% to settle at $65 a barrel. Meanwhile, U.S. West Texas Intermediate crude (WTI), which is a blend of U.S. West Texas Intermediate and West Texas Intermediate, dropped 13 cents or 0.2% to settle at $60.56. The dollar continued to weaken, and gold prices increased by more than 1%. Spot gold increased 1.86%, to $3288.96 per ounce.
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US to declare Biden fuel efficiency rules beyond legal authority
Automakers said that the U.S. Transportation Department will declare that the fuel economy regulations issued by then-President Joe Biden, which included electric vehicles when setting the rules exceeded the legal authority of the government. Sean Duffy, Transportation Secretary, said that the National Highway Traffic Safety Administration of the Department submitted to the White House on Friday its interpretive rule "Resetting Corporate Average Fuel Economy Program". He said that the previous administration "illegally" used CAFE standards to impose a mandate for electric vehicles, which drove up car prices. The reduction in fuel efficiency requirements could be achieved by removing EVs as a factor for calculating credits and regulatory mandates. NHTSA announced in June that it will increase CAFE standards for light duty vehicles to approximately 50.4 miles per gallon (4.67 grams per 100 km) from 39.1 miles per gallon currently. Last year, 120 Republican legislators said that NHTSA overstepped its authority when it adopted fuel economy standards. "These standards effectively mandate EVs and at the same force the internal combustion engines out of the marketplace." The lawmakers stated that the agency "accounted EVs in their regulatory baseline and factored this baseline into their determination of maximum achievable CAFE Standards." House Republicans proposed last week to kill the EV credit and repeal fuel efficiency regulations designed to encourage automakers into producing more zero-emission cars as part of a broader tax reform bill. The federal law requires NHTSA set CAFE standards to the maximum possible level. The Environmental Protection Agency announced that it would begin the effort to reverse Biden's parallel vehicle emission rules, which would force automakers into building a growing number of EVs. However, the agency has not yet begun to rescind California’s legal authority to enforce its 2035 EV regulations. The EPA also plans to reconsider the rules that award credits for vehicles with "start-stop" technologies, which are found in about half of all new cars. NHTSA stated last year that the rule would cut gasoline consumption by 64 billion gallon and emissions by 659 millions metric tons. (Reporting and editing by David Shepardson, Stephen Coates, Chris Reese and Aurora Ellis).
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Analyst at Moody's says that Colombia's public debt is a risk to its sovereign rating.
A top Moody's Analyst said that if a planned fiscal consolidate in Colombia does not stabilize public debt or comply with fiscal rules it could result in a ratings reduction for the Andean country. Renzo Merino said that the Colombian economy will grow 2.5% in this year at an event organized by Moody's. Moody's has rated Colombia as Baa2. In June last year, it lowered the outlook of the country from "stable" to "negative", citing economic conditions which complicate fiscal management. Merino said that the main risk is that Colombia's credit policies may have been weakened. This could lead to a lower outlook. Moody's, he said, will reassess Colombia's sovereign credit rating once Colombia releases its medium-term budget framework in June. He said that it was important for the government to be transparent, and publish credible estimates. It is also important to show where adjustments will take place. Moody's has given Colombia a rating that is two notches higher than Fitch or S&P. Merino stated that the problem with Colombia was that it spent more relative to its income than it brought in. Merino added spending cuts had already been made, but they were not enough. Merino stated that the key question will be whether or not the new administration can reverse a decline in public finances. Analysts believe that the fiscal deficit target of 5,1% of Colombia's gross domestic product (GDP) is unlikely to be achieved. The central bank has slowed down the rate cuts due to the deterioration of Colombia's public finances. In April, the central banks reduced the rate to 9.25% by 25 basis points. Merino stated that the pressure on the country’s treasury meant limited margins to operate, and the government was forced to take high-cost debt. Nelson Bocanegra, Rafael Escalera Montoto and Aida Pelaez Fernandez edited the article.
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Venezuelan minister: US detainee is handed to Trump's envoy at Antigua
In a Tuesday message, Venezuelan Information Minister Freddy Nazareth Nanez confirmed that a U.S. national who was detained in Venezuela had been handed over to Richard Grenell - an envoy for U.S. president Donald Trump - on the Caribbean Island of Antigua. Nanez provided the information when asked whether a post made by far-right U.S. activists Laura Loomer, in which they named the detained American Air Force veteran Joe St. Clair as well as stating that he was on his way to the United States along with Grenell, was true. "Correct," Nanez responded. The U.S. State Department and the White House did not respond immediately to a comment request. Bloomberg reported on Tuesday morning, citing an unnamed single source, that Grenell was in Antigua meeting with representatives of Nicolas Maduro to negotiate the release at least one U.S. prisoner. News outlet said that the U.S. would extend by 60 days the wind-down period for the license that allows U.S. Oil Company Chevron to work in the country. The license was due to expire on the 27th of May. Two sources confirmed that Grenell met with Jorge Rodriguez the head of Venezuela’s ruling party-allied parliament and offered Grenell the extension. Grenell would have to get approval from the U.S. Treasury Department as well as the State Department. Treasury did not respond immediately to a comment request about the potential extension. Grenell returned to the United States in January after meeting Maduro with six Americans who were held in Venezuela. Vivian Sequera reported from Caracas, and Marianna Pararaga reported from Houston. Additional reporting was provided by Daphne Psaledakis in Washington and Timothy Gardner. Julia Symmes Cobb wrote the article. Sandra Maler edited it.
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Sources say that the Syrian leadership has approved the return of dead spy archives to Israel.
Three sources said that the Syrian leadership had approved the transfer of Eli Cohen's belongings to Israel to show goodwill towards Donald Trump and to reduce Israeli hostility. Israel announced on Sunday that it had recovered the documents, photos and personal belongings of Cohen, claiming its spy agency Mossad worked with a foreign intelligence agency, which was not named, to obtain the material. A Syrian security source, an advisor to Syrian President Ahmed al-Sharaa, and a person who is familiar with the backchannel discussions between the two countries have all confirmed that the archive was actually offered to Israel by Sharaa in an indirect gesture to calm tensions and gain Trump's trust. Cohen, who infiltrated Syria's political establishment in 1965 and was then hanged on a Damascus street, is still considered a hero by Israelis. He's Mossad’s most celebrated spy, having uncovered military secrets which helped the Mossad to win the Middle East war in 1967. Benjamin Netanyahu, the Prime Minister of Israel, described Cohen as "a legend" and the "greatest intelligence agent in state history". Mossad hailed the return of the archive of his files held by Syrian intelligence for 60 years as "a moral achievement of the highest order". Israel has not revealed publicly how it came to possess the archive, saying that the only way the archive was acquired was through "a complex and covert Mossad operation in collaboration with an allied Foreign Intelligence Service". The White House, the office of Netanyahu and Syrian officials did not respond immediately to requests for comments on Syria's involvement in Israel's retrieval of the Cohen Archive. COHEN DOSSIER According to a Syrian security source, after rebels led Sharaa ousted President Bashar Al-Assad suddenly in December, ending the 54-year rule of his family, they discovered the Cohen dossier inside a building for state security. Source: Sharaa, his foreign advisors and the other source quickly decided to use material as leverage. According to a Syrian security source, Sharaa realised the importance of the Cohen archives to Israel and that their return would be a significant diplomatic act. Sharaa must end Israeli attacks on Syria, and improve relations with the United States as well as other Western countries in order to rebuild his country that has been ravaged by civil war for 14 years. Israel views Sharaa, his former insurgents and the al Qaeda group that once ruled Syria as unreconstructed jihadists. Israeli forces launched an incursion in border areas last summer and bombed multiple targets to support Syria's Druze minority sect. This month, it was reported that the United Arab Emirates set up a secret channel for talks between Israel & Syria. The effort included building confidence between the two sides. According to two sources familiar with the issue, there have been additional indirect channels of communication. A person familiar with the talks has confirmed that Syria agreed in the talks to return the remains of Cohen and three Israeli soldiers who were killed in Lebanon fighting Syrian forces during the early 1980s. Israel announced last week that the body of Zvi Feldman was returned. Sharaa approved the return of the Cohen archives directly and in context with the confidence-building measures, said the source. Last week, Trump held a surprise meeting Sharaa, in Saudi Arabia. He urged him normalise relations with Israel and declared that he would Lift sanctions On Syria Officials in Syria have stated that they wish to see peace in the entire region. Sharaa confirmed in this month's issue that Damascus has conducted indirect talks with Israel through states with which it is in contact in an effort to calm down the situation.
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Nippon Steel is still committed to a full U.S. Steel acquisition -executive
A senior executive from Japan's Nippon Steel said that the company is committed to acquiring a 100% stake in U.S. Steel. The company also wants to meet with U.S. Treasury Sec. Scott Bessent, to clarify Donald Trump's stance regarding the deal. The deadline is May 21 for the steelmakers to complete a new national security review of the proposed merger of $15 billion by the Committee on Foreign Investment in the US. Former President Joe Biden had blocked the merger in January on national security grounds following an earlier review. Trump ordered the CFIUS in April to reassess this deal, which raised hopes for a reversal. In February, he had said that the deal would be an investment, not a purchase. Trump will decide on the fate of this transaction by June 5, according to expectations. Takahiro Muri, Nippon Steel's Vice Chairman and lead negotiator in the deal, said on Tuesday that "our intention to pursue a complete buyout remains unchanged." He said that only full ownership could allow Nippon Steel share its core technologies and strengthen U.S. Steel. Mori stated that "there is no such thing as free technology". He said Nippon Steel had requested a meeting Bessent, the chair of CFIUS to better understand Trump’s position before a final decision. According to three sources familiar with the situation, Nippon Steel has announced plans to invest up to $4 billion into a new steel mill if the Trump Administration approves its bid to acquire the iconic U.S. Steel company. Mori refused to comment on the details of the CFIUS discussions, but stated that any increase in investments would be linked to higher returns and wouldn't strain the company’s finances. Mori stated that the deal would make U.S. Steel stronger and United States more powerful, and it was "100% in line with Trump's policies" by increasing foreign investment and domestic production. Mori noted that President Trump would approve the plan if he fully understood (the strategic significance). He said that the majority of the board members of U.S. Steel will be Americans, and three independent directors, appointed by CFIUS (the U.S. Government), who are responsible for national security issues, will oversee trade and manufacturing capacity. (Reporting by Yuka Obayashi, Ritsuko Shimizu; Editing by Raju Gopalakrishnan) The world's fourth largest steelmaker is expecting its net profit to drop by 43% during the fiscal year that ends March 2026. This will be due to the slump in global steel prices caused by China's overproduction and exports as well as impact of U.S. Tariffs. Reporting by Yuka obayashi and Ritsuko shimizu, Editing by Raju gopalakrishnan
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Oil prices fall on weak China demand and geopolitical uncertainties
The oil prices dropped on Tuesday as a result of uncertainty surrounding the U.S.-Iran nuclear negotiations and Russia-Ukraine talks. Meanwhile, new government data revealed a cautious outlook for China's economy, which is the world's largest crude importer. Brent futures fell 42 cents or 0.6% to $65.12 per barrel at 11:02 am EDT (1502 GMT), whereas U.S. West Texas Intermediate crude (WTI) dropped 26 cents or 0.4% to $62.43. Iran's Ayatollah Khamenei, the Supreme Leader of Iran, said that U.S. demands for Tehran to stop enriching its uranium were "excessive" and "outrageous," and expressed doubts about whether negotiations on a new deal in nuclear energy will be successful. According to U.S. Federal Energy data, Iran will be the third largest crude oil producer in the Organization of the Petroleum Exporting Countries group (OPEC) in 2024 after Saudi Arabia and Iraq. Alex Hodes, StoneX analyst, said that a deal between Iran, the U.S., and other countries would allow Iran's oil exports to increase by 300,000-400,000 barrels a day if sanctions are eased. StoneX analyst Alex Hodes said that the European Union and Britain did not wait for the U.S. before announcing new sanctions against Russia. This was a day after U.S. president Donald Trump met with Russian President Vladimir Putin, but without a ceasefire promise in Ukraine. Ukraine wants to know more Group of Seven The (G7) advanced economies will reduce their price caps on Russian oil shipped by sea to $30 per barrel. The current G7 price cap is imposed over Russia's war on Ukraine The price of a? is $60. It does not appear likely that the Russia/Ukraine conflict will be resolved immediately. While it may lead to more Russian oil on the market in the future, this is uncertain and out of time as Russia still has its obligations to OPEC+, said Bjarne Shieldrop. A peace agreement between the two countries to end their war Russia The Ukraine and Russia could enable Moscow to export even more oil. Russia is a part of the OPEC+ countries. Other producers. The second largest crude oil producer in the world was Russia. According to U.S. Federal Energy Data, in 2024. CHINESE DATA On Tuesday, at least seven Federal Reserve officials will speak. Traders expect that the U.S. Central Bank will deliver at least two 25 basis-point rate cuts in 2025. The first is expected to be in September. Interest rates are used by central banks such as the Fed to control price inflation. By lowering consumer borrowing costs, lower interest rates can boost economic growth and oil demand. Analysts expect a decline in fuel demand in the world's largest oil importer. Data showing a deceleration in industrial output and retail sales has put more pressure on oil. Goldman Sachs, however, pointed to an increase in China trade late Monday. The analysis did not take into account a 90 day pause between the U.S. In Germany, Europe's largest economy, Finance Minister Lars Klingbeil has promised to take swift measures in order to boost investment in the face of global trade uncertainty. OIL INVENTORIES On Tuesday and Wednesday respectively, the American Petroleum Institute (API), a trade group, and the U.S. Energy Information Administration will release data about U.S. crude oil inventories. Analysts predict that energy companies will have removed about 1.4 millions barrels of crude oil from U.S. stocks during the week ending May 16. This would be the third decrease in four weeks. The same week last season, there was an increase in barrels of 1.8 millions barrels. Over the past five-year period (2020-2024), the average decline has been 3.5 million barrels. (Reporting and editing by Scott DiSavino and Trixie Yap; Louise Heavens, Clarence Fernandez and Paul Simao).
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US stocks fall, Treasury yields increase; Trump tax-cut plan in sight
The major stock indexes showed mixed results on Tuesday with U.S. shares easing, but U.S. Treasury Yields rising as investors focused their attention on the critical U.S. Presidential vote that took place in Washington. Donald Trump Tax cuts for all. Go to Capitol Hill urged Republican legislators to settle their differences on a bill to extend tax cuts for 2017 from Trump's initial term. Investors worry that the bill could increase the U.S. deficit faster than expected. Moody's Investors Service, a credit rating agency in the United States, downgraded its credit rating on Friday evening. This sparked concerns over the U.S. government's debt. "With the Republican Bill still in the air, it's just enough to make people a bit more cautious, and maybe use this recent rally to trim a bit of their portfolio (of stocks)," said Rick Meckler. S&P 500 registered a six-day streak of gains on Monday. Investors awaited comments from Federal Reserve officials. Traders currently expect at least two rate cuts of 25 basis points from the Fed before the end 2025. The Dow Jones Industrial Average dropped 74.64, or 0.1%, to 42.717.94. The S&P 500 declined 13.78, or 0.2%, to 5,950.01, and the Nasdaq Composite was down 64.75, or 0.3%, at 19,150.81. Home Depot's sales for the first quarter were better than Wall Street expectations, but the retailer was still down 0.1% compared to the overall market. European stocks edged Utilities and telecom companies lead the gains. MSCI's global stock index rose by 0.11 points or 0.01% to 882.50. The pan-European STOXX 600 rose by 0.68% while Europe's FTSEurofirst 300 rose by 14.86 points or 0.68%. Germany's DAX reached a new record high. China's blue chip index rose 0.54%, after the central bank of China cut its benchmark lending rates for first time since October. The yield on the benchmark 10-year U.S. notes increased 1.2 basis points from late Monday to 4,487%. After touching 5.037% Monday, the 30-year bond yield has gained 4 basis points and is now at 4.981%. The yields of Japanese government bonds with a super-long maturity date reached all-time records on Tuesday. A poor auction of securities with a 20-year maturity was the immediate cause of this. The Japanese yield on the 20-year bond JP20YTN=JBTC> has jumped up to 15 basis points, reaching 2.555%. This is its highest level since 2000. And, for the 30-year bond, it reached a new record of 3.14%. Investors waited for more Fed officials to comment before the U.S. Dollar declined. The dollar fell against the yen in late morning trading. It reached a two-week low at 144.095 yen. Last down 0.1%, at 144.64yen. It has fallen in five out of six sessions. The Australian dollar plunged against the U.S. Dollar after the Reserve Bank of Australia lowered benchmark interest rates 25 basis points. The Aussie last fell 0.9% to US$0.6401. Canada's inflation rate slowed to 1.7% annually in April, which was higher than the 1.6% economists had predicted. The Bank of Canada closely monitors two of the three key measures of inflation. They also reached 13-month highs due to underlying price pressures. U.S. crude dropped 0.69%, to $62.26 per barrel. Brent was down to $65.11 a barrel on the same day. Spot gold increased by 0.42%, to $3243.21 per ounce.
As the dollar continues to fall, geopolitical uncertainties persist.
Tuesday, gold prices increased by more than 1% as the U.S. Dollar continued to weaken. Meanwhile, uncertainty remained over U.S. Tariff Policy and the Russia-Ukraine truce.
Gold futures in the U.S. were up 1.5% at $3283.10 an ounce at 1049 ET (1449 GMT) while spot gold rose 1.6% to $3280.32.
The dollar fell again on Tuesday due to the Federal Reserve's cautious stance on the economy. It had already fallen on Monday, after the ratings agency Moody's had downgraded U.S. sovereign credit rating last week.
The dollar is weaker, making bullion more affordable for buyers of other currencies.
There's still some uncertainty on the market. David Meger is director of metals at High Ridge Futures. He said that the Moody's rating downgrade and the weakening dollar has supported the precious-metals complex in general.
Moody's has downgraded America from "Aaa to "Aa1", citing concerns over the growing national debt. Fed officials spoke on Monday, taking into account the implications of the downgrade and the unsettling market conditions. They continued to navigate a uncertain economic climate.
Bullion is a good investment during times of geopolitical or economic uncertainty.
"Gold will trade between $3,000 to $3,500 throughout the rest of the year." According to Edward Meir, Marex analyst, there is a short-term chart resistance at the $3.270 mark.
Meger stated that the ongoing tensions between Russia, Ukraine and other countries are more important for platinum and palladium. This is because no deal would mean a lesser supply of these metals on the market. Russia is the second largest platinum and palladium producer in the world.
The EU and Britain announced sanctions against Russia without waiting for the U.S. To join them on Tuesday, a day following President Donald Trump's meeting with Vladimir Putin in which he was unable extract a promise of a ceasefire for Ukraine.
Platinum rose 3.8% to $1 035,53, its highest level since October 2024. Palladium climbed 2.7% to $1,001.25 and reached its highest level since February 14, a 3.8% increase.
Spot silver increased 1.3% to 32.78 dollars. (Reporting by Sarah Qureshi in Bengaluru; Editing by Jan Harvey)
(source: Reuters)