Weekly Markets
Week of May 19–23
This week, markets were focused on the evolving fiscal debate and long-term interest rates.
KEY HIGHLIGHTS BY REGION
This week, Moody’s downgraded the U.S. sovereign credit rating from ‘Aaa’ to ‘Aa1’, citing the growing fiscal deficit and high refinancing costs. Meanwhile, the fiscal debate is intensifying, and the Fed remains cautious. Here are the main developments by region:
- United States: Moody’s cut the U.S. credit rating. The House passed Trump’s fiscal plan, which includes tax cuts and increased defense spending. The Fed signaled no rate cuts before September. Yields on 10- and 30-year Treasuries rose. Toward the end of the week, President Trump proposed a 50% tariff on the European Union and a 25% tariff on Apple.
- Europe: U.K. inflation came in above expectations, reaching 3.5%. In Germany, the Ifo Business Climate Index rose more than forecast, signaling greater corporate confidence.
- China: Retail sales rose 5.1% year-over-year in April, missing expectations. The central bank cut its key lending rates for the first time since October.
- Brazil: Economic activity grew 0.8% in March, twice the expected pace. On a yearly basis, growth reached 3.49%.
- Mexico: Inflation in the first half of May accelerated to 4.22%. First-quarter GDP remained unchanged from the initial estimate. Additionally, a 15% average tariff is anticipated on vehicles exported to the U.S.
Fiscal and trade uncertainty continues to shape the outlook. While many recent developments were partially priced in, upcoming shifts in interest rates, inflation, and growth will remain key drivers for markets in the months ahead.
KEY DATES TO WATCH
- May 26 (U.S.): Markets closed for Memorial Day
- May 28 (U.S.): Release of the Fed’s latest meeting minutes
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