Wall Street Plunges on Budget Concerns; Treasury Yields Surge Amid Tariff Discussions
Key Takeaways
- Wall Street fell: Dow -1.91%, S&P 500 -1.61%, Nasdaq -1.40% amid budget bill doubts.
- Treasury yields surged to 5%; CPI rose to 3.5%; rate cut warnings issued.
- Oil prices jumped on reports of a possible Israeli strike on Iranian nuclear facilities.
- Norinchukin reported a $12.6 billion loss as the bank seeks profitability.
- Private banking clients consider gold for hedging portfolios amid equity market rallies.
Top Stories
Wall Street indices fell amid budget bill discussions.
On May 21, 2025, Wall Street experienced a downturn with the Dow Jones falling by 1.91%, the S&P 500 by 1.61%, and the Nasdaq by 1.40% due to economic doubts and U.S. deficit concerns amid Congressional discussions on President Trump's budget bill.
Treasury yields surge; tariffs discussed; rate cuts warned.
On May 21, 2025, bond traders bet on rising long-term Treasury yields, with the 10-year yield testing 5% amid concerns about President Trump's tax bill. G7 finance chiefs discussed tariffs on low-priced Chinese products, while the Bank of England warned against excessive interest rate cuts. CPI rose to 3.5% year-on-year, with core at 3.8% and services at 5.4%.
Oil prices jump on potential Israel-Iran conflict.
On May 21, 2025, oil prices increased following reports of a possible Israeli strike on Iranian nuclear facilities, raising concerns about U.S.-Iran talks.
Norinchukin posts $12.6 billion loss.
Norinchukin reported a $12.6 billion loss as the bank seeks a path to profitability.
Private banking clients consider gold for hedging.
On May 21, 2025, it was reported that private banking clients are considering gold to hedge portfolios and take a defensive stance, anticipating upside potential due to equity market rallies.
Market Insights
Investors reluctant to lend long-term to governments.
On May 22, 2025, John Authers reported that global investors are increasingly hesitant to lend to governments for extended periods, negatively impacting holders of long-dated bonds due to rising 30-year yields.
Franklin Templeton: Markets comfortable with Trump's approach.
On May 21, 2025, Jenny Johnson, CEO of Franklin Templeton, stated at the Qatar Economic Forum 2025 that markets are becoming more accepting of US President Donald Trump’s strategies.
Clients explore hedging, private credit gains interest.
On May 21, 2025, it was noted that clients are exploring hedging strategies amid low volatility, with private credit attracting interest as interest rates decline, and diversification across equities, including some moving into European markets.
Economic Trends
ECB: Strong euro weighing on inflation.
On May 21, 2025, ECB’s Escriva stated that the unexpectedly strong euro is negatively impacting inflation.
Middle East diversifying economy, improving non-oil GDP.
On May 21, 2025, it was reported that the Middle East, especially the GCC, is economically strong, focusing on foreign direct investments, regulatory improvements, and deeper capital markets, achieving diversification with improved non-oil GDP.
Middle East capital markets see growth, alternative financing.
On May 21, 2025, it was observed that clients are examining the growth of capital markets in the Middle East, noting a strong performance in debt capital markets this year, and are also seeking alternative financing.
Energy Sector Watch
ONGC profit misses estimates on low oil prices.
On May 22, 2025, it was reported that State-run Oil and Natural Gas Corp.’s quarterly profit fell short of expectations due to lower crude oil prices and reduced production from aging fields.
Global Trade Dynamics
Trade tensions threaten French cognac industry.
On May 21, 2025, Bernard Arnault voiced concerns about trade tensions endangering the cognac industry in Charente-Maritime, which employs 80,000 people.
JPMorgan committed to China despite tensions.
On May 22, 2025, JPMorgan Chase & Co. CEO Jamie Dimon affirmed his firm's commitment to long-term investments in China during a Bloomberg TV interview at the lender’s Global China Summit in Shanghai, despite governmental tensions.
Citi: Constructive trade talks, Middle East well-placed.
On May 21, 2025, Citi's Haddad discussed a new era for US trade and globalization, noting positive discussions on tariff reduction and trade deals. He highlighted the Middle East's strong position, emphasizing long-term strategies and diversification away from oil.
EU aligns with US on tough China stance.
On May 21, 2025, the EU is following a similar approach to the US regarding tariffs, indicating a unified stance on China without directly antagonizing the United States.