Podcast
Putting Market Moves Into Perspective
Will Simpson and Greg Wise
May 23, 2025
It’s been a tough week across the board. After four straight weeks of gains, U.S. markets pulled back sharply, with fresh tariff headlines on Friday adding to the pressure. The S&P 500, Dow, and Nasdaq are all down more than 4% on the week. International markets held up a bit better, but are still set to finish in the red. Small caps had an especially rough go, with the Russell 2000 down 5.6%. There really wasn’t anywhere to hide, including bonds.
Bond yields surged this week, mostly on the long end, pulling markets lower after Moody’s downgraded the U.S. from Aaa to Aa1, the third ratings agency to lower. That set the stage for some dramatic headlines about ‘weak demand’ in a Treasury auction. But let’s be real, the demand wasn’t nearly as bad as it was made out to be.
The move in yields feels more associated to the ‘One Big Beautiful Bill’ (OBBB) than the auction itself. More debt issuance as a result of tax cuts would increase the supply of Treasuries, which could put continued upward pressure on yields. But putting it into perspective, bond yields are rising around the world. Because if we really have a U.S. Treasury problem, the issue is a lot bigger than just Treasuries.
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