Garton Global | Weekly Market Digest
Markets are wobbling as fiscal fears, credit downgrades, and shifting rate expectations unsettle investors.
The US dollar faces renewed pressure amid ballooning debt concerns, while sterling steadies on Brexit progress and inflation surprises. In Asia, trade optimism and policy recalibrations are fuelling currency strength.
With volatility back on the radar, now’s the time to review your positioning. Talk to the Garton Global team today.
Last Week
🇺🇸 Dollar slipped as Trump tax bill stoked debt fears and Moody’s downgrade hit sentiment
● The US dollar fell last week as investors digested the passage of Donald Trump’s sweeping tax bill and a credit downgrade from Moody’s.
● The bill, projected to add trillions to the federal deficit, coincided with the US losing its triple-A rating, intensifying concern over fiscal sustainability.
● Rising Treasury yields and weakening demand at bond auctions signalled growing risk aversion and capital rotation away from US assets.
🇬🇧 Pound edged higher as UK-EU deal and inflation surprise boosted long-term outlook
● Sterling gained after the UK and EU reached a late-stage agreement on a post-Brexit reset, easing trade and political tensions.
● A stronger-than-expected rise in UK inflation also reinforced expectations that interest rate cuts from the Bank of England may be delayed.
● The developments supported a firmer long-term view on the pound, with markets cautiously adjusting rate and growth forecasts.
🇰🇷 Asian currencies rallied on trade détente hopes and intervention rollback bets
● The Korean won, yen and Taiwan dollar rallied as markets priced in expectations that currency management would feature in upcoming US trade talks.
● Optimism around tariff de-escalation and potential limits on central bank intervention supported regional FX strength.
● Traders rotated into Asian currencies, lifting them to the top of the year’s performance charts against the dollar.
This Week
🇺🇸 US dollar under pressure as debt concerns mount
● US Senate to debate budget bill this week; markets uneasy over potential $4tn debt increase.
● Moody’s downgrade and rising long-dated yields heighten scrutiny ahead of key Treasury auctions.
● Any signs of deeper Senate spending cuts may calm bond markets and support the dollar short term.
🇨🇦 Canadian GDP to test BoC rate cut bets
● Q1 GDP due Friday; growth seen slowing to 0.2% q/q from 0.6% amid weaker US-bound exports.
● Tariff-related trade disruption likely hit March data, despite modest gains in non-US shipments.
● A downside surprise may lift rate cut odds for June and pressure the Canadian dollar.
Key Events
Wednesday May 28th
02:30 Australian CPI
03:00 New Zealand Cash Rate
07:00 US FOMC minutes
Thursday May 29th
13:30 US Prelim GDP & Unemployment Claims
20:00 UK Gov Bailey Speaks
Friday May 30th
All day – German Prelim CPI
13:30 Canadian GDP & US PCE Price Index
Have a great week,
The Garton Team.
Contact the Garton Global Team and schedule a meeting here: https://calendly.com/n-walsh-garton-global/30min