Today's Update 05-22-2025

Key Points and Metrics

Key Points and Metrics:

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1. Economic Data Releases:

   United States:

   • Initial Jobless Claims

     • Actual: 227,000

     • Forecast: 230,000

     • Previous: 229,000

     • Slightly better than expected, indicating steady labor market conditions.

   • Continued Jobless Claims

     • Actual: 1.903 million

     • Forecast: 1.8816 million

     • Previous (Revised): 1.867 million

     • Higher than forecast, suggesting a modest increase in ongoing unemployment.

   • Chicago National Activity Index

     • Actual: -0.25

     • Forecast: -0.25

     • Previous: -0.03

     • Aligned with expectations but indicates a decline in economic activity.

   Canada:

   • Producer Price Index (PPI) MoM

     • Actual: -0.8%

     • Forecast: -0.5%

     • Previous: 0.5%

     • Producer prices fell more than expected, suggesting decreased cost pressures.

   • Raw Materials Price Index (RMPI) MoM

     • Actual: -3.0%

     • Forecast: -2.3%

     • Previous: -1.0%

     • Larger decline indicates lower input costs for manufacturers.

   Eurozone:

   • German Services PMI Flash

     • Actual: 47.2

     • Forecast: 49.5

     • Previous: 49.0

     • Below 50, signaling contraction in the services sector and weaker than expected.

   • German Manufacturing PMI Flash

     • Actual: 48.8

     • Forecast: 48.8

     • Previous: 48.4

     • Slight improvement but still indicating contraction.

   • Eurozone Services PMI Flash

     • Actual: 48.9

     • Forecast: 50.5

     • Previous: 50.1

     • Dropped below 50, showing contraction across the euro area services sector.

   • Eurozone Manufacturing PMI Flash

     • Actual: 49.4

     • Forecast: 49.2

     • Previous: 49.0

     • Slightly better than expected but remains in contraction territory.

   United Kingdom:

   • Services PMI Flash

     • Actual: 50.2

     • Forecast: 50.0

     • Previous: 49.0

     • Moved above 50, indicating a modest expansion in services.

   • Manufacturing PMI Flash

     • Actual: 45.1

     • Forecast: 46.1

     • Previous: 45.4

     • Further decline, deepening the contraction in manufacturing.

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   Market News and Events:

   • OPEC+ Production Increase:

     • Discussing an additional output hike of 411,000 barrels per day in July.

     • Contributed to a weakening in oil prices due to expected increased supply.

   • U.S. Legislative Developments:

     • Trump's Tax Bill:

       • Passed by the Republican-led House; moves to the Senate.

       • Stirred concerns about potential increases in the U.S. deficit.

     • Market Impact:

       • U.S. bonds and stocks experienced volatility amidst deficit worries.

       • 30-Year Treasury Yield: Remains above 5%.

   • Federal Reserve Insights:

     • Fed's Waller:

       • Expressed optimism about the U.S. economy's resilience.

       • Indicated potential for rate cuts later in the year if trade tensions ease.

       • Noted minimal current impact from tariffs on economic data.

   • Global Market Movements:

     • Asian Markets:

       • Shares fell due to concerns over the U.S. tax-cut bill and deficit implications.

     • Currency Strength (Strongest to Weakest):

       • JPY, AUD, CAD, GBP, USD, CHF, EUR, NZD.

   • Economic Sentiment:

     • JPMorgan CEO Jamie Dimon:

       • Warned of risks that could lead to stagflation in the U.S., citing geopolitics and deficits.

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   Upcoming Earnings Estimates:

   • May 21st:

     • Target Corporation (TGT)

       • Earnings Release: 06:30 ET

       • Expected EPS: $1.68

       • Expected Revenue: $24.1 billion

   • May 28th:

     • Salesforce (CRM)

       • Earnings Release: 16:00 ET

       • Expected EPS: $2.55

       • Expected Revenue: $9.75 billion

     • NVIDIA (NVDA)

       • Earnings Release: 16:20 ET

       • Expected EPS: $0.89

       • Expected Revenue: $43.27 billion

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Market Highlights:

• Republican-led US House passed Trump tax bill, sending measure to Senate

• Moody's Ratings recently lowered US credit score below triple-A level

• ECB meeting minutes revealed increased confidence inflation will return to target

• BoJ's Noguchi indicated no rush to raise rates or trim bond holdings

• Asian shares fell 0.6%, retreating from seven-month high

• JPMorgan CEO Dimon warned of stagflation risks from geopolitics, deficits, and price pressures

Economic Calendar Focus:

• Today: US S&P PMI data (09:45 ET), US Existing Home Sales (10:00 ET), EIA Natural Gas Change (10:30 ET)

• Tomorrow: Japanese CPI data, UK Retail Sales, New Zealand Retail Sales

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Final Thoughts

The markets are showing significant concern over the fiscal implications of Trump's tax bill, with Treasury yields rising sharply as investors worry about expanding US deficits. This fiscal anxiety has spread across global markets, with Asian shares retreating and European PMI data showing weakness, particularly in Germany's service sector. Meanwhile, OPEC+ discussions about increasing oil production have pressured crude prices lower. The combination of deficit fears, central bank policy uncertainty, and mixed economic data is creating a volatile trading environment. Investors should closely monitor upcoming economic releases and Fed speakers for signals on the interest rate path, while keeping an eye on developments in the Senate regarding the tax legislation.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.

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