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4d ago

Markets Stabilize Following U.S. Tax Bill Passage and Moody’s Downgrade

Treasury yields hold steady, Asian equities inch higher, and the Federal Reserve signals potential rate cuts as global markets assess fiscal and trade uncertainties.

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Workers clean the glass window of a building in front of an electronic stock board showing Japan's TOPIX index at a securities firm Friday, May 23, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, May 23, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)
A man walks outside the New York Stock Exchange (NYSE) building on Tuesday following Monday’s broad sell off in New York City, U.S., March 11, 2025. REUTERS/Shannon Stapleton/File Photo

Overview

  • Moody’s downgraded the U.S. credit rating on May 16, citing rising debt concerns, as the national debt surpasses $36 trillion.
  • The U.S. House narrowly passed President Trump’s $3.8 trillion tax bill, which is expected to increase the deficit significantly over the next decade.
  • U.S. Treasury yields have stabilized after recent sell-offs, with the 30-year yield holding near 5.04%, reflecting renewed market confidence.
  • Asian shares made cautious gains, with Japan’s Nikkei up 1% following strong inflation data, while the MSCI Asia-Pacific index rose 0.1%.
  • Federal Reserve Governor Christopher Waller suggested potential rate cuts in late 2025, contingent on tariff resolutions, while the Supreme Court upheld the Fed’s independence.