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U.S. Loses Last Triple-A Credit Rating
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As markets calm after the U.S. and China agreed to slash tariffs for a period of 90 days, focus is set to switch to how tariffs and the uncertainty surrounding them are affecting the global economy.
U.S. purchasing managers’ index on manufacturing and services activity in May will be closely watched this week, alongside similar figures from the eurozone and the U.K.
In Europe, investors will be watching trade talks between the European Union and the U.K., alongside data on U.K. inflation.
In Asia, markets will watch for progress in trade talks between the U.S. and other countries in the region, as well as key data from China and a rate announcement by its central bank.
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U.S. Loses Last Triple-A Credit Rating
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Photo: Angela Weiss/Agence France-Presse/Getty Images
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The U.S. lost its last triple-A credit rating.
Moody’s Ratings downgraded the U.S. government on Friday, citing large fiscal deficits and rising interest costs.
Runaway budget deficits mean U.S. government borrowing will balloon at an accelerating rate, pushing interest rates up over the long term, Moody’s said. The firm said in a March report that fiscal weakness looked set to continue even under analysts’ best-case scenarios.
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Ben Bernanke Argues for More Transparency at the Fed
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The Federal Reserve should do more to show the public how it is thinking about the economy, former Fed Chair Ben Bernanke said. Bernanke suggested the Fed should go farther yet by posting a quarterly report giving its assessment of the economy and a forecast of how the central bank sees it evolving.
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Consumer Sentiment Falls to Second Lowest on Record
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Trump Says U.S. Will Set Tariff Rates in Coming Weeks
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President Trump said the U.S. will unilaterally set tariffs for many countries soon. Speaking on his Middle East tour, the president said 150 countries were seeking to make a deal, "but you’re not able to see that many countries."
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The Ditch-America Trade Now Has Its Own Acronym: ABUSA
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An investment theme is only complete when it gets its own acronym, and the brokers that gave us BRIC, FANG, PIGS and TMT have captured the latest trend perfectly: ABUSA, or Anywhere But U.S.A.
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Will Anyone Take the Factory Jobs Trump Wants to Bring Back?
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Key Developments Around the World
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U.K. and EU Strike Trade, Security Deal Years After Brexit
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Britain and the European Union signed a deal to ease trade and bolster security cooperation, taking the biggest step to improve their relationship since the U.K. quit the bloc five years ago.
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EU Lowers Growth Forecast as U.S. Tariffs Expected to Hit Exports
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The European economy will grow more slowly than previously expected this year and next as higher U.S. tariffs hit exports, while inflation will cool more rapidly, the European Union’s economists said Monday.
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China’s Economy Feels the Sting From Trade War
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China’s economy showed signs of slowing in April as trade tensions with the U.S. soared, underlining the risks high tariffs posed before they were sharply scaled back by Washington and Beijing.
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U.S. Allies Are Still Waiting for Tariff Relief
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The U.S. hammered out a trade truce with its foremost geopolitical rival in record time. Reaching agreement with longtime allies is proving more of a slog. The U.S. drew up a list of 18 key trading partners to focus on in negotiations following President Trump’s April 2 tariff blitz, when he slapped “reciprocal” tariffs on almost all U.S. imports. Yet aside from one quick agreement with the U.K. and now the tariff rollback with China, none have so far yielded the kind of breakthrough that would bring relief for painful import levies.
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Breaking Down Trump’s Entanglements With Crypto
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President Trump and his family’s embrace of cryptocurrencies have made the sector one of the biggest winners in his second term. Critics have raised ethical concerns given Trump’s vast business interests. Here’s what to know about his crypto moves.
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10 a.m.: Quarterly Retail E-Commerce Sales
10 a.m.: Leading Indicators
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9 a.m.: Johnson Redbook Retail Sales Index
12 p.m.: Federal Reserve Bank of St. Louis President Alberto Musalem speaks at Economic Club of Minnesota event
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NY Fed's Williams Sees Life Lessons in Interest Rates
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John Williams, president of the New York Fed, lays out a life lesson in interest rates in a graduation speech at Hofstra University in Hempstead, N.Y. Sunday. Describing his professional work on deducing the economy's natural interest rate, he notes, "The problem is that you can't look it up in a book or find it in a statistical table. Like many things in life, you must learn about it through experience and evidence (although I am sure if you ask ChatGPT, it will give you an answer)." A ChatGPT query proves Williams correct: The generative AI chatbot indeed offers a natural-interest-rate estimate -- citing the Laubach-Williams model, which Williams himself published along with economist Thomas Laubach in 2003. The model, currently updated through 4Q 2024, gives a real-interest-rate estimate of about 1.3%. — Matt Grossman
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Consumer Sentiment Seen as Held Down By Policy Uncertainty
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Policy uncertainty is weighing on U.S. consumer sentiment, SignatureFD's Tony Welch says. The University of Michigan May preliminary consumer sentiment index was 50.8, missing a consensus forecast of 53.5 in a Wall Street Journal survey. Welch says sentiment could improve if Trump's trade policy becomes more clear, the Fed starts to cut interest rates and Congress approves a tax bill "all in a pretty short order." He notes that economic indicators still show soft inflation and resilient job creation. The disconnect "can only last for so long," and if policy uncertainty lingers on, indicators "could start catching down," Welch says. — Paulo Trevisani
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President Trump has made no secret of his disdain for renewable energy. Just as challenging for the industry is fighting policy battles in parts of the U.S. where business has flourished.
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House Republicans pushed President Trump’s “big, beautiful” tax-and-spending bill past a key hurdle Sunday night, but the last-minute grappling has them colliding with a stark reality: The plan won’t reduce federal budget deficits and would make America’s fiscal hole deeper.
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For generations, colleges around the U.S. fueled local economies, creating jobs and bringing in students to shop and spend. Growing student enrollment fattened school budgets and freed universities from having to worry about inefficiencies or cutting costs. The student boom has since ended, and college towns are suffering.
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WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.
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