Stocks, bonds and the USD are all falling this morning.
https://www.nytimes.com/2025/05/19/business/stock-markets-moodys-sp500.html
Markets Rattled on Concerns About U.S. Debt
Stocks fell, the dollar slipped and bond yields jumped after a rating downgrade highlighted worries about the cost of President Trump’s policies and the health of the economy.
By River Akira Davis and Jason Karaian, The New York Times, May 19, 2025
Turbulent trading hit financial markets on Monday, with investors selling U.S. stocks and bonds and the dollar, an ugly combination that suggests sentiment is souring on the outlook for the world’s largest economy…
One factor jarring markets is a bill in Congress that would make President Trump’s signature 2017 tax cuts permanent and could add trillions of dollars to federal debt. A House committee voted to approve the bill Sunday night, although it was expected to remain a focus of contentious congressional debate.
The United States’ loss of its last triple-A credit rating late on Friday and mounting concerns about government debt have threatened to disrupt the relative calm in markets that has prevailed since Mr. Trump paused many of his tariffs in recent weeks…
Higher rates tend to push up the value of the U.S. dollar, but the currency slid on Monday against the euro, yen and others. That suggested investors may be turning against the United States in general, an echo of the market turmoil last month when spiking yields, falling stocks and a sinking dollar raised questions about the “safe haven” status of U.S. assets… [end quote]
Over the weekend, President Trump attacked Walmart for indicating it would raise prices in response to tariffs, saying the retail heavyweight and China should “eat the tariffs.”
Walmart stock is down. I’m sure that meddling by the president in corporate pricing decisions didn’t help the stock market. Hello, this is a capitalist economy not a monarchy! It’s bad enough to impose tariffs without ordering companies to “eat” the cost.
This isn’t “safe haven” behavior. Along with many other sudden, unpredictable Trump executive orders that directly impact the U.S. economy, not to mention hostile language and actions against our allies. Not to mention the boneheaded idea that the U.S. government could charge a tax on Treasuries bought by foreign countries (an implicit default).
Is this a quick, temporary reversal that the market will absorb? I think probably the real reversal will come later in the year when the full effects of tariffs, the budget, Congressional debates about raising the debt limit and a possible recession will arrive.
Wendy