Moody markets and political trends

plus: negotiations, debt, tariffs, geopolitics and more

“What you get by achieving your goals is not as important as what you become by achieving your goals.” – Zig Ziglar ||

Hi everyone, I hope you’re all doing well! Well, well, a lot has happened since Friday’s US stock market close… And, of course, I’m still nursing my Eurovision disappointment ☹ I was rooting for Sweden, Estonia, Netherlands, anyone but that painful operatic screeching that my senior dog is still recovering from.

(I got Memorial Day’s date wrong last Friday, stupid European mistake, sorry!)

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✨POLL✨ You’d be doing me a HUGE favour if you could take a couple of seconds to let me know what kind of Crypto is Macro Now content you find most interesting (I’ll still keep covering both, I just want to know a bit more about you!). 🙏

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IN THIS NEWSLETTER:

• Coming up: negotiations, G7, housing and more

• Moody markets

• Europe’s elections: the far-right advances

• Macro-Crypto Bits: geopolitics, sentiment, tariffs and more

If you’re not a premium subscriber, I hope you’ll consider becoming one! You get ~daily commentary on markets, tokenization, regulation and other signs that crypto IS impacting the macro landscape. As well as relevant links and music recommendations ‘cos why not.

WHAT I’M WATCHING:

Coming up:

Today, we get another vote on cloture (end debate, pass to the floor for a full vote) of the Senate’s GENIUS Act stablecoin bill.

Also today, President Trump is supposedly speaking to Russian President Putin about the Ukraine war. Neither showed up for talks in Istanbul last week – a good result from the call would be an agreement to bring all parties together in coming days.

And the UK and EU are meeting to attempt a relationship reset – as a Brit living in Spain, I’m selfishly hoping for easier travel.

India is in the US this week to negotiate trade, but the situation is politically complicated (see below).

Starting tomorrow, G7 finance ministers meet in Canada – the suspense is not so much around what they may collectively say about the US trade policy, as whether they’ll be able to agree on any official statement at all. US Treasury Secretary Scott Bessent is expected to attend.

On Thursday, we get the preliminary read from S&P Global on US manufacturing and services activity for May – special attention will be paid to price indicators.

Finally, Thursday and Friday bring us US home sales data, expected to show continued weakness.

Moody markets

(*hehehe couldn’t help myself)

The downgrade of US government debt from Aaa to Aa1 by rating agency Moody’s, announced after the stock market close on Friday, makes for startling headlines – but it’s not a surprise, nor does it change the investability of US debt. It could jolt markets, though, although that would be more a reflection of sentiment as a change in fundamentals.

Both S&P Global and Fitch, the other two large rating agencies, lowered their assessment in 2011 and 2023 respectively, so in a sense Moody’s is just catching up. And in November 2023, Moody’s put treasuries on a “negative” watch, suggesting that a downgrade was on the horizon unless the fundamentals turned around – and they didn’t. So, there wasn’t much doubt that this would happen, which means it’s largely priced in. And institutional investors who could buy treasuries last week will still be able to do so this week, as the combined rating was less than pristine anyway.

Whether they will want to is a separate issue.

Moody’s move reminds global investors that the US is heading into slippery territory. According to the statement: