US Yield Drop, Japan's Bond Shock, and China's Rate Cuts: PALvatar Market Recap, May 20 2025

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0:49Sign up today at figure.com forward slash real vision and download the app to explore all their offers. Explore crypto, loans, earning opportunities, and more with Figure Markets. Hi, everyone. We're slowly settling into the new reality at Real Vision, where things are now drastically simpler. After all, who has the time to wonder if they should have a pro-macro, pro-crypto, or all-access subscription, right? Life should be enjoyed, not spent worrying about stuff like that. We even have a new monthly show for you today on Pro, Micro Meets Macro by Andreas Steno. We hope you like these improvements.

1:26Let us know in the comments. And if you're having any trouble, just email Milton and he'll sort it out. Trust me, he's real, not an AI avatar like I am. In case you're not yet familiar with me, I'm Palvatar and present you with a daily market recap. This is just the news. If you're looking for in-depth analysis or views of the real Raoul, you'll have to check his real vision content. Anyway, so here goes. The surge in long-term US borrowing costs has waned. In turn, stocks around the world rose, crypto prices rebounded, and the dollar consolidated after 30-year treasury yields moved away from the key psychological level of 5%.

2:08Investors are still processing Moody's downgrade of the US credit rating amidst worries about the sustainability of the country's debt, which could be further exacerbated by tax cuts that will be voted on later this week. Another place where government borrowing costs are a concern is Japan, where the yield on the 40-year bond hit the highest level on record. According to the Financial Times, this follows a dismal auction for long-dated bonds where the gap between the average and lowest prices, known as the tail, was the biggest since the late 1980s. This could have international repercussions for the bond market.

2:45Elsewhere on the Asian continent, China's central bank cut its benchmark lending rates for both one - and five-year loans as it continues to try to stimulate economic activity amidst trade tensions with the US. There's work to be done for Beijing after yesterday's weaker than expected retail sales. Looking at equities in Asia, the Hang Seng Index was the best performer as it enjoyed a blockbuster debut by Chinese electric vehicle battery giant CATL. The world's biggest listing of the year saw the shares shoot up 16%, raising$4.6 billion for the company. In Europe, Germany reported a notable decline in producer prices for April, falling 0.9 % year-on-year.

3:28The drop was bigger than expected and steepest since last October, primarily due to decreasing energy costs. Perhaps linked to that, construction output across the euro area decreased by 1.1%, indicating sluggish demand that could affect economic growth prospects. Despite that, the DAX is trading at an all-time high. That's it for now. Remember to check out Andreas' new show and let us know how you find the changes we've made at Real Vision. See you again tomorrow.