Last Week at a Glance

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Global equities rallied last week following a significant roll back of US-China tariffs. US Treasuries declined as yields rose, with markets paring back expectations of Fed rate cuts.

  • The US and China agreed to temporarily lower tariffs for 90 days, with US tariffs on China now at 30% from the prior 145%, and China tariffs on US goods declining to 10% from 125%. US equities rallied sharply in response, supporting broader gains in global equities.
  • US Treasury yields rose as the de-escalation in US-China trade tensions led investors to dial back Fed rate cut expectations. Ten-year Treasury yields rose 7 bps over the week to end at 4.44% but had briefly risen to 4.53% mid-week. Softer US consumer data supported the subsequent stabilization of yields. US retail sales in April grew at a muted pace of 0.1% M/M, reflecting a pull back in consumer spending.
  • Treasury yields may experience near-term volatility. On Friday, Moody’s downgraded the US government’s credit rating from AAA to AA1, citing increased US debt concerns. This follows similar downgrades by the S&P in 2011 and Fitch in 2023.
  • April’s US headline CPI fell to 2.3% Y/Y, while core CPI held steady at 2.8% Y/Y, reflecting a still modest impact of tariffs on consumer prices. However, US producer prices declined 0.5% M/M, largely reflecting a decline in margins as firms likely absorbed some of the higher import duties.
  • Gold pulled back sharply last week and fell to -4.9% amid risk-on sentiments, albeit prices are still at 21% YTD.

Sources: Bloomberg Index Services Limited, MSCI Inc., and Thomson Reuters Datastream. MSCI data provided “as is” without any express or implied warranties.
Notes: This edition was prepared on May 18, 2025, and it reviews developments of the prior week. The equity data are total returns net of dividend taxes of MSCI indexes in local currency. Global natural resources equities are represented by the MSCI All Country World Commodity Producers Index. The fixed income data are total returns for Bloomberg indexes. Gold Bullion uses near-month gold futures contracts, as traded on the COMEX, to determine performance. Currency performance is based on Reuters data.