Closing Recap 

U.S. stock futures point sharply lower, threatening to snap a multi-day winning streak, as a Moody’s downgrade of the U.S. credit rating and renewed tariff concerns weigh on sentiment; Treasury yields are spiking, the dollar is weakening, and gold is rallying. 

Key Takeaways 

• Futures Tumble on US Downgrade: Equities indicate a significantly negative open (S&P futures -1.1%) after Moody’s downgraded the U.S. credit rating to AA1 from AAA late Friday, citing growing debt. 
• Win Streak at Risk: The S&P 500’s 5-day winning streak is in jeopardy. Last week saw hefty gains across major indices. 
• Tariff Uncertainty Returns: Treasury Secretary Bessent warned that tariffs could revert to high levels if countries don’t negotiate in “good faith,” reigniting trade fears. 
• Treasury Yields Spike: The 10-year Treasury yield jumped 10 bps to 4.54%, and the 30-year yield rose 12 bps to its highest since Nov 2023, reacting to the downgrade and debt concerns. 
• Dollar Falls, Gold Jumps: The U.S. dollar fell sharply (Euro up 1%), while gold prices surged 1.75% as a safe haven. 
• Global Markets Weaker: Asian markets mostly declined, and European markets opened lower. 
• Busy Week Ahead: Focus on global PMIs, numerous Fed speaker appearances, RBA rate decision (cut expected), and G7 finance chiefs meeting. 
• China Data Mixed: China’s April retail sales missed expectations, while industrial output was stronger than forecast. 

Market Overview 

U.S. equity markets are poised for a sharply lower open this morning, with futures indicating a clear risk-off sentiment driven primarily by Moody’s decision late Friday to downgrade the U.S. credit rating from AAA to AA1. Moody’s, the last major rating agency to maintain a triple-A rating for the U.S., cited concerns over the nation’s rapidly growing $36 trillion debt pile as the reason for the downgrade. This news has sent shockwaves through financial markets, putting the S&P 500’s recent five-day winning streak under serious threat after a week of strong gains driven by trade de-escalation hopes. 

Index (Futures)	Up/Down	% Change	Last
Dow	-305	-0.0071	42431
S&P 500	-67	-0.0112	5908
Nasdaq	-320.5	-0.0149	21185

Adding to the negative tone, U.S. Treasury Secretary Scott Bessent stated on Sunday that the temporary tariff reductions could revert to the previously announced high levels if trading partners are not perceived to be negotiating in “good faith.” This remark has rekindled fears about the fragility of the recent trade truce and the potential for renewed escalations. The market reaction has been swift: Treasury yields have spiked significantly, with the 10-year yield jumping 10 basis points, reflecting increased borrowing cost concerns. The U.S. dollar has fallen sharply against currencies like the Euro, while safe-haven gold has rallied strongly. 

Global markets are also reflecting the cautious mood, with Asian indices mostly lower (though some markets were closed) and European bourses opening in the red. Investors are now bracing for a busy week on the macroeconomic front, with numerous Federal Reserve speakers scheduled, a rate decision from the Reserve Bank of Australia (where a cut is anticipated), global PMI data, and a G7 finance chiefs meeting that may touch on foreign exchange rates. In other significant news, former U.S. President Joe Biden has reportedly been diagnosed with an aggressive form of prostate cancer.

Economic Calendar 

Today’s U.S. economic calendar features the Leading Index. However, market focus will be dominated by the reaction to the Moody’s downgrade and ongoing trade/tariff commentary. 

• 10:00 AM ET: Leading Index M/M for April
• China Data (Apr – Reported Overnight): 
• Retail Sales: +5.1% y/y (Missed 5.5% est., vs. +5.9% prior). 
• Industrial Output: +6.1% y/y (Beat 5.5% est., vs. +7.7% prior). 
• Fixed-Asset Investment (YTD): +4.0% y/y.

Commodities, Currencies, and Treasuries 

Commodity markets are reacting sharply to the Moody’s downgrade and renewed trade uncertainties. Gold prices surged $56.80 (+1.75%) to $3,244.00 per ounce as investors flocked to the traditional safe haven. Crude oil prices are trading lower, with WTI down around $0.92 to $61.57/bbl, pressured by concerns that higher borrowing costs and trade friction could dampen global economic growth and energy demand. The U.S. dollar index has fallen sharply, with the Euro gaining over 1% against the greenback. The dollar also weakened against the Japanese Yen. Treasury yields have spiked higher across the curve due to the credit downgrade; the 10-year Treasury yield jumped 10.2 basis points to 4.541%, and the 30-year yield rose 12 basis points to 5.017%, its highest since November 2023. TIC data released late Friday showed record overseas holdings of U.S. Treasuries in March.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.92	USD/bbl	61.57
Brent	-0.81	USD/bbl	64.6
Gold	56.8	USD/oz	3244
EUR/USD	0.0114	USD	1.1276
USD/JPY	-0.88	JPY	144.74
10-Year Note	0.102	%	0.04541

Looking Ahead 

The market will be heavily focused on the fallout from the Moody’s U.S. credit downgrade and its impact on borrowing costs and investor sentiment. Any further commentary from rating agencies or U.S. officials will be critical. The numerous Fed speakers scheduled this week will also draw significant attention for their views on the economy, inflation, and potential policy responses to the current market conditions. Trade developments remain a key wildcard, with Secretary Bessent’s comments adding a layer of renewed caution. The G7 finance chiefs meeting may also yield market-moving headlines, particularly regarding foreign exchange.