Notable market news this past week (25-May-25)
Here is the Skeptivest roundup of the latest market headlines for the week
🇺🇸 Moody’s US debt downgrade barely affected equities, but treasury impact raises consumer rate concerns
Moody’s US debt downgrade and market reaction: Moody’s lowered the US credit rating to Aa1, barely affecting equity markets but pushing 30-year Treasury yields higher. This increase raises borrowing costs for consumers on mortgages and loans amid ongoing fiscal concerns tied to trillion-dollar deficits and rising interest payments on the $36.2 trillion debt.
US housing market strained as yields rise and Trump eyes mortgage shake-up: Rising treasury yields, spurred by the Moody’s downgrade, are pushing mortgage rates higher, pressuring an already fragile housing market. Existing home sales fell 0.5% in April, with one in seven buyers canceling deals, while prices still climbed 1.7% to $418,000 on average for single family home. Uncertainty around tariffs and deficits threatens to keep borrowing costs elevated. Adding to the volatility, President Trump is considering privatizing Fannie Mae and Freddie Mac, a move that could end their government guarantees and drive mortgage rates even higher.
☕️ Quick fire happenings to note
🌏 Global macro
- Trump tariffs drive record customs revenue, but fall short of tax cut offset: US importers paid a record $16.5bn in customs duties for goods received in April, driven by tariffs imposed under President Trump, including 10% base rates globally, 25% on steel, aluminum, and autos, and a 51% average on Chinese goods. While April's collections push total customs and excise revenue to at least $22.3bn, a monthly record, the inflows still fall short of offsetting the cost of Trump’s GOP tax cuts, casting doubt on the administration's fiscal claims.
- US pressures EU on tariffs, eyes broader trade moves: The US is urging the EU to unilaterally lower tariffs or risk facing 20% “reciprocal” duties, according to the Financial Times. At the same time, Donald Trump is engaging Japan on trade negotiations, while Treasury Secretary Scott Bessent reportedly made a strong impression at the recent G-7 summit, signaling a coordinated push on U.S. trade priorities.
- US Dollar slides to 2023 lows amid tariff fears and fiscal worries: The US dollar hit its lowest level since 2023 as renewed tariff threats from Donald Trump and concerns over a growing fiscal deficit eroded investor confidence. The Bloomberg Dollar Spot Index dropped as much as 0.8% on Friday, capping a more than 7% decline YTD. Ongoing pressure from speculative traders betting against the dollar and anxiety over Trump's trade stance have contributed to the currency’s four-day slide in the past five sessions.
- Japan’s export engine sputters amid tariff pressures: Japan’s exports to the U.S. fell 1.8% in April, hit by Trump-era tariffs of 25% on cars and 24% on other goods, causing Japan’s export growth to slow and a trade deficit to emerge. A stronger yen also weighed on export values. The government downgraded its global outlook, citing moderating U.S. growth and stalling global activity. Auto parts makers like Kyowa Industrial are diversifying into medical devices to offset declining demand. With Prime Minister Ishiba calling tariffs a “national crisis,” ongoing talks with Washington are vital to stabilizing Japan’s export-reliant economy.
- Top US universities are hoarding cash at levels unseen since Covid or the Great Recession amid funding disputes with the federal government over alleged antisemitism enforcement. Harvard, Northwestern, and Princeton have raised hundreds of millions through bonds, while Yale plans to sell up to $6bn of its private equity holdings, nearly 15% of its $41.4bn endowment. Yale’s move away from private equity, a strategy it pioneered with the “Yale Endowment Model,” is raising concerns about the future of the sector.
- Netanyahu vows full Gaza takeover amid warnings of humanitarian crisis: Israeli Prime Minister Benjamin Netanyahu announced plans for a full takeover of the Gaza Strip as the military prepares an “unprecedented attack” on Hamas. While vowing to resume aid deliveries to alleviate severe malnutrition and starvation risks among Gaza’s 2mn residents, only 9 aid trucks had entered via the Kerem Shalom crossing by Monday evening, according to a UN official, underscoring the dire humanitarian situation.
- India Pakistan standoff: The May 10 India-Pakistan standoff underscored how nuclear deterrence still prevents full-scale war, consistent with the Stability-Instability Paradox, which suggests nuclear powers avoid major conflict but engage in limited skirmishes. However, India’s new hardline stance, treating future terror attacks as acts of war, challenges this balance by calling Pakistan’s nuclear bluff, potentially increasing the risk of escalation. While deterrence held this time, growing brinkmanship may one day push the region past the point of no return.
🏦 Individual stocks/companies
- Nike (-18.53% YTD) eyes recovery with price hikes and Amazon comeback amid margin woes: Nike plans to raise prices on higher-end footwear and resume direct sales on Amazon as it battles slumping sales, margin erosion, and market share losses. Global revenue fell 9% last quarter, 17% in China, amid inventory bloat and discounting, pushing gross margin down 3.3ppts to 41.5%, with further contraction expected. The upcoming price hike (effective June 1) targets shoes above $100, while the Amazon return aims to regain control over distribution and Gen Z reach. Tariff exposure and overreliance on Asian suppliers add to execution risk.
- Klarna’s (not public) growth challenged by rising losses and economic headwinds: Klarna hit 100mn users but is grappling with rising credit losses and a tough economy that has stalled its IPO plans. Despite revenue growth, its net losses doubled as many customers struggle to repay BNPL loans. While demand may rise in a recession, higher delinquencies and reduced spending pose risks. After cutting costs with AI, Klarna is now rehiring staff to improve customer support amid these challenges.
- Hims & Hers (-12.68% past 5 days) tanks on new medicare auditing measures: Hims & Hers Health shares fell 7.7% to close at $53.52, pressured by broader healthcare sector weakness. The decline followed the Centers for Medicare & Medicaid Services’ announcement of new auditing rules for Medicare Advantage plans, raising concerns across healthcare stocks.
- IonQ (+36% past 5 days) soars on renewed investor optimism in quantum computing: IonQ’s shares soared, driven by renewed investor enthusiasm and a positive year-to-date performance. The rally was supported by momentum in the quantum computing sector, boosted by talks of reauthorizing the National Quantum Initiative Act, which could secure crucial funding for quantum research. IonQ’s gains signal increasing confidence in the commercial potential of quantum technologies.
- Wix (-15.82% past 5 days) tanks due to disappointing results: Wix faced heavy losses after its mixed Q1 2025 earnings report disappointed investors, missing revenue expectations amid a negative market mood. Despite the selloff, many Wall Street analysts maintain buy or strong buy ratings, with firms like Raymond James setting optimistic target prices, signaling a potential buying opportunity.
🇸🇬 Singapore related
- Singapore keeps 2025 growth forecast at 0 to 2% amid trade uncertainty: Singapore’s 2025 GDP growth forecast remains at 0% to 2%, with a slight improvement in external demand after US-China tariff truces. However, risks persist from potential trade tensions, slower global growth, and recession concerns. Q1 growth slowed to 3.9% YoY but contracted 0.6% QoQ, led by manufacturing and finance, while consumer sectors weakened. Export-reliant industries face tariff pressures, and overall growth is expected to ease in the second half of the year. Experts warn a technical recession is possible amid ongoing uncertainties.
