Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Monday, May 19.
State of Play
The big news of the weekend was Moody’s downgrade of US credit. Less noticed was comments by US Treasury Secretary Scott Bessent that the US would be imposing new tariffs soon. As we eye or board of indicators for signs of direction at 0655 ET, that is weighing on risk appetite:
Stock index futures are dropping, led by tech which was one of the biggest gainers the last couple of weeks. The Nasdaq is down 1.6% at the time of this writing. S&P 500 futures are off 1.2%;
Bonds are also down. This is where the effects of the Moody’s downgrade will be felt most. The 10-year yield is up 11 basis points to 4.55% (yields move inversely to prices), its highest level of the year. It’s still well below the 52-week high of 4.81% set back in November, however;
The move in commodities also follows, with gold and silver rallying but 1%+ each. WTI crude oil is down 1.3% to trade around $61/barrel. Copper is up 0.8% however, perhaps the lone bright spot among risk assets;
Cryptos’ immediate reaction to the weekend news was to move higher but that has since reversed. Bitcoin is now unchanged from Friday, at $103,000 or therabouts.
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