Higher Interest Rates For All. A Stocks Casinos Crash Next?

Baltic Dry Index. 1341 +04           Brent Crude 64.03

Spot Gold 3315                US 2 Year Yield 4.00  unch.

US Federal Debt. 36.884 trillion!!!

A recession is when your neighbor loses his job. A depression is when you lose yours.

Ronald Reagan

Don’t look now but the global economy seems to be in increasing distress. Globally interest rates are rising. Debt service trouble lies directly ahead,

Bunker time!

Asia-Pacific markets mostly climb as investors assess slew of economic data

Updated Fri, May 23 2025 11:50 PM EDT

Asia-Pacific markets mostly climbed Friday as investors assess a slew of economic data from the region.

Japan’s benchmark Nikkei 225 rose 1.04% and the Topix climbed 0.89%. South Korea’s Kospi rose 0.36% while the small-cap Kosdaq was down 0.34%.

Australia’s benchmark S&P/ASX 200 was up 0.33%.

Hong Kong’s Hang Seng index and mainland China’s CSI 300 traded flat at the open.

The U.S. and China agreed to maintain communication following a call between Chinese Vice Foreign Minister Ma Zhaoxu and U.S. Deputy Secretary Christopher Landau, according to a readout released by the Chinese Foreign Ministry on Friday.

Japan’s core inflation accelerated to 3.5% in April, government data showed Friday, bolstered in part by surging rice prices, as the central bank considers pausing its rate-hike stance to assess the effects of U.S. tariffs.

Investors are also parsing South Korea’s PPI figures for April and New Zealand’s retail sales for the first quarter of the year.

Other economic data are set to be released later in the day, with Singapore slated to report inflation data for April, and Taiwan to publish its industrial output figures.

U.S. stock futures were little changed as investors continue to evaluate the effect of higher U.S. Treasury yields on the economy. Futures tied to the Dow Jones Industrial Average added 14 points, or 0.03%. Nasdaq 100 futures were marginally lower, while S&P 500 futures ticked up 0.03%.

Overnight stateside, the three major averages closed mixed as investors grappled with fears of rising rates and worries about a ballooning U.S. deficit. The 30-year Treasury yield hit its highest since 2023 as lawmakers passed a bill that investors fear could worsen the U.S. deficit.

The Dow Jones Industrial Average slipped 1.35 points, closing at 41,859.09. The S&P 500 lost 0.04% and ended at 5,842.01, while the Nasdaq Composite advanced 0.28% and settled at 18,925.73.

Asia-Pacific markets live: Japan CPI, Singapore CPI, South Korea PPI

Investors dump bonds globally as U.S. credit downgrade, Trump’s tax bill ignite fiscal worries

Published Thu, May 22 2025 5:28 AM EDT Updated Thu, May 22 2025 8:08 AM EDT

A sell-off in global bonds is accelerating as Moody’s downgrade of U.S. credit rating and President Donald Trump’s tax bill has brought to fore investors’ fiscal concerns globally.

Events such as credit rating downgrades or budgets that risk expanding deficits tend to bring fiscal concerns front and center of investors’ minds, forcing them to reprice long-end risk, said Rong Ren Goh, Portfolio Manager, Fixed Income, Eastspring Investments.

While Trump was unable to sway GOP dissenters to support his broad tax bill that could drive U.S. debt higher by a projected $3 trillion to $5 trillion, it appears to have triggered a global bond rout.

“Markets do not find Trump’s “big, beautiful tax bill” beautiful at all,” said Vishnu Varathan, a managing director at Mizuho Securities. “USTs were beaten up in an ugly sell-off.”

The U.S. 30-year Treasury yield broke above the key 5% mark for the second straight day, breaching the level last reached in November 2023. It is currently holding at 5.088%. The benchmark 10-year Treasury yield has climbed over 15 basis points since the start of the week.

The sell-off in Treasurys comes on the back of the exodus in American assets in April, and is largely owed to investors’ declining confidence in U.S. assets, said market watchers.

When investors dumped U.S. Treasuries last month, they turned to bonds in Japan and Germany. This time, the Treasury sell-off is accompanied by investors exiting bonds across several major markets.

Contagion effect — and more

The sell-off in long-duration bonds in each market has been driven by distinct factors, with the common thread being a growing unease with worsening fiscal trajectories. “These concerns are prompting a reassessment of the term premium required to hold longer-dated bonds,” said Goh.

Japan’s 40-year government bond yield hit a record high of 3.689% Thursday. The country’s 30-year government bond yield has also been hovering near all-time highs at 3.187%.

The yield on Japan’s benchmark 10-year government bond has climbed 9 basis points to 1.57% so far this week.

The rapid steepening of Japan’s government bond yield curve is owed to several reasons, but the key one is structural. Japanese life insurance companies, who used to buy long-term bonds in droves to comply with certain solvency regulations are no longer doing that, as they have largely met the regulatory criteria, according to Bank of America.

Additionally, the Bank of Japan’s inclination to tighten its monetary policy, which collides with the Asian nation’s fiscal woes, also have a hand in fueling the bond sell-off, said Varathan.

The sell-off in Japanese government bonds poses a bigger problem for U.S. sovereign debt. “By making Japanese assets an attractive alternative for local investors, it encourages further divestment from the U.S.,” George Saravelos, Deutsche Bank’s global head of FX strategy wrote in a note.

German government bonds — known as bunds — are also being dumped. Yield on 30-year German debt are up over 12 basis points, while the 10-year yield is up over 6 basis points.

“The removal of the German debt brake in tandem with continental re-armament, alluding to an end of Europe’s pro-austerity bias and a revival of regional growth prospects were, arguably, the catalyst for the process [bond sell-off],” said Philip McNicholas, Asia strategist of the global macro fixed income team at Robeco.

German bunds are also pressured by wider deficits, which are likely to be structural, Mizuho Securities’ Varathan said. 

The 30-year Europe government bond yields have climbed over 12 basis points this week, and the 10-year yields are up about 7 basis points.

“Investors don’t really have much love for long duration bonds right now,” Steve Sosnick, chief strategist at Interactive Brokers told CNBC.

Concerns about global inflation are also a “killer” for longer bonds, said Sosnick, adding that shorter duration bonds are typically influenced by central bank policy, while longer duration debt is influenced more by investor expectations about the future of the economy.

More

Global bonds selloff: investors turn away from long-dated debt

In other news, the US Treasury market raised yet another red flag for the US stock casinos. Japan’s inflation surge.

A tepid US Treasury auction is rattling markets with deficit fears running high

May 21, 2025

Stocks tumbled and bond yields spiked on Wednesday after a weak US government bond auction rattled investors and added to concerns about America's fiscal situation.

A $16 billion auction of 20-year Treasurys was met with weak demand. The US sold the bonds at a rate over 5%, the highest rate on the 20-year since 2020, according to Bloomberg.

The 10-year yield spiked 11 basis points to 4.595%, and the 30-year also rose 12 basis points to 5.089%.

The surge in yields sent stocks tumbling later in the trading session

---- A sell-off in bonds had resumed earlier in the day after pausing on Tuesday, as chatter over the US budget and the House GOP tax bill fueled more concerns about the deficit.

Bond yields, which move inversely to prices, climbed earlier on Wednesday as traders surveyed the outlook for the US fiscal situation. A sweeping fiscal package that's moving through Congress has been inching forward, driving renewed fears that the US could see trillions added to the deficit in the next 10 years.

Investors have grown anxious in the last few days about the Republicans' tax bill winding its way through Congress. Worries are growing about the long-term trajectory of the US deficit, which economists have warned about for years.

The tax bill in its current form could add nearly $4 trillion to the national debt balance over the next decade, according to a projection from the Tax Foundation.

Bond vigilantes — investors who protest policy by selling bonds and driving yields higher — are homing in on the tax bill given its impact on the safety and sustainability of US debt, according to Ed Yardeni, a market veteran and the president of Yardeni Research.

"I think the perception is we really risk trouble if Washington doesn't do something more meaningful about narrowing the deficit," Yardeni told Business Insider in an interview last week, speculating that the 10-year yield could rise as high as 5%. "The administration is recognizing that the bond market, that the bond vigilantes are a force to be reckoned with," he added.

"The bond vigilantes continue to lurk," Michael Brown, a senior research strategist at Pepperstone, wrote in a note on Wednesday. "Clearly, President Trump somewhat laughably claiming to be a 'fiscal hawk' while also trying to pass a $5tln tax cut hasn't exactly reassured market participants."

Bonds have been on a roller coaster this year on fears about tariffs, inflation, and America's fiscal situation.

The yield on the 10-year US Treasury edged close to 5% in the weeks before Trump's inauguration, partly because investors were anticipating the inflationary impact of some of the president's proposed policies.

Since then, yields have whipsawed, with notable spikes occurring when the president announced his April 2 tariffs and when Moody's downgraded the US's debt rating last Friday, adding to concerns over the government's ability to keep borrowing at high levels.

President Donald Trump's team has suggested he's keeping an eye on the bond market this year, particularly the 10-year US Treasury yield, which is an indication of long-term interest rates in the economy.

The bond market got credit for helping to rein in the president's tariff policy in the early days of this trade war last month, with Trump pausing most tariffs for 90 days after a sharp sell-off that sent yields spiraling higher.

A tepid US Treasury auction is rattling markets with deficit fears running high

Japan’s core inflation climbs to 3.5%, highest in more than 2 years

Published Thu, May 22 2025 7:43 PM EDT

Japan’s core inflation accelerated to 3.5% in April, government data showed Friday, bolstered in part by surging rice prices, as the central bank considers pausing its rate hike posture to assess the impact of U.S. tariffs.

The core inflation figure, which strips out prices for fresh food, was higher than expectations of 3.4%, according to economists polled by Reuters, rising from 3.2% in the previous month and marking the highest level since January 2023.

Headline inflation climbed 3.6% from a year ago, steady from the prior month and staying above the Bank of Japan’s 2% target for more than three years.

Bank of Japan Governor Kazuo Ueda has signaled his stance on intending to raise rates given price trends, while also citing the need to monitor closely the effects of U.S. tariffs.

Rice prices in Japan have doubled over the year. The average price in 1,000 supermarkets across the country reportedly continued to hit record highs, with prices for a 5-kilogram bag of rice hiking by 54 yen from the previous week to 4,268 yen ($29.63) as of May 11.

The country’s prime minister, Shigeru Ishiba, has reportedly pledged to lower rice prices to below 4,000 yen ($28) per 5-kilogram bag, staking his job on the line.

The core inflation is expected to ease in the coming months due to lower crude oil prices and the yen’s appreciation, said Masato Koike, economist at Sompo Institute Plus.

----Marcel Thieliant, head of Asia-Pacific at Capital Economics, anticipates the persistent strength in inflation will convince the BOJ to hike interest rates again in October.

Japan currently faces a 10% baseline tariff that U.S. President Donald Trump imposed on most trade partners, alongside a 24% “reciprocal” tariff, which is set to come into effect in July, unless the country manages to strike a deal with the U.S.

The country is also one of the hardest hit by Trump’s 25% levy on auto, steel and aluminum products.

The bilateral negotiation, however, appears to be in a standoff. Japanese senior officials have requested that Washington remove all tariffs on Tokyo, emphasizing that the country will not rush into any deal that puts the country’s interests at risk.

Japan's core inflation climbs to 3.5%, highest in more than 2 years

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

‘Not in a sweet spot’: JPMorgan’s Dimon sounds alarm on US stagflation, backs Fed’s rate hold

May 22, 2025

·         JPMorgan CEO Jamie Dimon warns US faces stagflation risk due to geopolitics, deficits, and price pressures.

·         Dimon supports the Federal Reserve's decision to "wait and see" before adjusting interest rates.

·         Concerns over Trump's tariff policies and their impact on trade, inflation, and business expansion persist.

JPMorgan Chase & Co. CEO Jamie Dimon has voiced significant concerns about the US economy, stating he cannot dismiss the possibility of stagflation as the nation grapples with formidable risks stemming from geopolitical instability, persistent budget deficits, and mounting price pressures.

He also endorsed the Federal Reserve’s current patient approach to monetary policy.

“I don’t agree that we’re in a sweet spot,” Dimon declared in a Bloomberg Television interview conducted at the lender’s Global China Summit in Shanghai.

He elaborated on the multifaceted threats, highlighting “huge deficits, inflationary factors, and geopolitical risk.”

In this context, Dimon asserted that the US Federal Reserve is “doing the right thing to wait and see before they decide” on future interest rate moves.

His comments come as Fed officials have maintained steady interest rates throughout the year, navigating a landscape characterized by a resilient economic backdrop juxtaposed with uncertainty over potential government policy shifts—such as tariffs—and their cascading effects on the economy.

Earlier this month, policymakers acknowledged an increased risk of simultaneously confronting both elevated inflation and rising unemployment, the hallmarks of stagflation.

A significant source of this uncertainty is the ongoing trade dynamic between the US and China.

While the two economic giants agreed earlier this month to a sharp reduction in tariffs for a 90-day period to negotiate a new trade agreement, the path forward is fraught with challenges.

Analysts and investors widely anticipate that US President Donald Trump’s tariffs on Chinese goods will likely remain at a level sufficient to severely curtail Chinese exports even after the 90-day truce concludes.

Dimon expressed a desire for continued dialogue: “I don’t think the American government wants to leave China,” he said.

“I hope they have a second round, third round or fourth round and hopefully it will end up in a good place.”

More

JPMorgan CEO Dimon sees stagflation risk for US, supports Fed's rate hold | Invezz

Covid-19 Corner

This section will continue only occasionally when something of interest occurs.

Researchers discover a genetic link to long COVID

May 21 2025

An international team of researchers has found a genetic link to long-term symptoms after COVID-19. The identified gene variant is located close to the FOXP4 gene, which is known to affect lung function. The study, published in Nature Genetics, was led by researchers at Karolinska Institutet in Sweden and the Institute for Molecular Medicine Finland.

Biological causes behind persistent symptoms after COVID-19 infection, known as long COVID or post-COVID, remain unclear. Common symptoms include fatigue, cognitive difficulties, and breathing problems, which can reduce quality of life.

In an international collaboration – the Long COVID Host Genetics Initiative – researchers have analysed genetic data from 6,450 long COVID patients and more than a million controls across 24 studies from 16 countries. They found a gene variant that increases the risk of long COVID by about 60 percent. The genetic association was confirmed in an independent analysis involving an additional 9,500 cases.

Impaired lung function plays a key role

The gene variant is located right next to the gene FOXP4, which is involved in lung development and lung disease.

“Our findings suggest that impaired lung function plays a key role in developing long COVID. While this gene variant significantly increases risk, it's important to recognise it as just one part of a much larger puzzle."

Hugo Zeberg, senior lecturer at the Department of Physiology and Pharmacology, Karolinska Institutet, and one of the lead researchers of the study

"Genetic studies can provide insights into disease risk factors and are particularly powerful for diseases where the exact mechanisms remain unknown," says Hanna Ollila, FIMM-EMBL group leader at the Institute for Molecular Medicine Finland, University of Helsinki, and researcher at the Department of Anesthesia and Center for Genomic Medicine at Massachusetts General Hospital, who co-led the study.

Researchers discover a genetic link to long COVID

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Nvidia’s Jensen Huang thinks U.S. chip curbs failed — and he’s not alone

Published Thu, May 22 2025 4:23 AM EDT

Replacing Nvidia is a tall order. While Chinese competitors are years behind the company’s cutting-edge technology, many analysts and insiders warn they are catching up, thanks to U.S. export restrictions.

U.S. chip restrictions on the sale of advanced semiconductor technology, especially those used in artificial intelligence, have been rolled out over several years, with the initial aim of curbing China’s military advancement and protecting US dominance in the AI industry.

However, according to Nvidia CEO Jensen Huang, U.S. semiconductor export controls on China have been “a failure,” causing more harm to American businesses than to China.

While the goals of cutting back the Chinese military’s access to advanced U.S. technology and maintaining U.S. leadership in AI appear to have had some success on paper, loopholes and existing semiconductor stockpiles in China have complicated these aims, said Ray Wang, an independent tech and chip analyst with a focus on U.S.-China competition.

“That’s partly why we are seeing a closing of the gap between Chinese and U.S. AI capabilities,” added Wang.

A self-inflicted wound?

Leaders of Nvidia and other American chip designers have long lobbied against chip controls as they worry about losing lucrative business deals. Huang said at the annual Computex technology trade show in Taipei that Nvidia’s GPU market share in China fell to 50% from 95% over the past four years.

Indeed, chip experts say that the curbs create more harm than good for the U.S.

“The effects of the controls are twofold. They have the impact of reducing the ability of U.S. companies to access the China market and, in turn, have accelerated the efforts of the domestic industry to pursue greater innovation,” said Paul Triolo, Partner and Senior VP for China at DGA Group.

“You create competitors to your leading companies at the same time you’re cutting them off from a massive market in China,” he added.

While Washington’s most comprehensive export controls were passed during former U.S. President Joe Biden’s term in the White House, curbs on Huawei and SMIC, China’s largest chipmaker, go back to Donald Trump’s first term in office.

On April 15, Nvidia disclosed that new controls, which restricted sales of its H20 graphics processing units to China, had led to a $5.5 billion charge against its revenue.

Nvidia’s Jensen Huang, semiconductor experts think U.S. chip curbs failed

Next, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

Another weekend and holiday weekend in both the UK and USA. I wonder what new economic mischief tariff war Team Trump will come up with for next week’s holiday shortened trading week? Have a great weekend every one.

The older I get the less I listen to what people say and the more I look at what they do.

Andrew Carnegie