Moody’s Downgrades US Sovereign Credit Rating
Moody’s downgraded the US sovereign credit rating from “Aaa” to “Aa1” on Friday, citing concerns over the sustainability of US debt. This makes it the last of the three major credit rating agencies to remove the US from its top AAA credit club. Moody’s stated, “Successive US governments and Congress have failed to agree on measures to reverse the trend of annual large fiscal deficits and growing interest costs.” The rating outlook was changed from “negative” to “stable.”
China’s Economic Data: Industrial Growth Expected to Slow to 5.5% in April Due to High Tariffs
China’s economy is under pressure (temporary pressure) from the US’ ultra-high tariffs imposed in April. A Reuters composite forecast from 24 institutions shows that China’s industrial added value above designated size is expected to grow by 5.5% year-on-year in April, the lowest since November last year. In consumption, driven by policies to replace old vehicles with new ones and increased holiday travel, retail sales of social consumer goods are expected to grow by 5.5% year-on-year in April, lower than March’s 5.9% but still at a relatively high level. Investment is expected to remain stable, with fixed asset investment (excluding rural households) from January to April projected to grow by 4.2% year-on-year, unchanged from the previous period.
Russia-Ukraine Direct Talks Fail to Reach Ceasefire; Ukraine Calls on Allies to Continue Pressuring Russia
Kyiv and Moscow failed to reach a ceasefire agreement in their first direct talks in over three years, with a Ukrainian source calling Russia’s proposed terms “unrealistic.” Following the talks, Ukraine secured support from Western allies on Friday. Russia expressed satisfaction with the talks and willingness to continue engagement. After the meeting, Ukrainian President Zelenskyy immediately spoke with Trump and the leaders of France, Germany, and Poland to mobilize allies for harsher sanctions against Russia. US President Trump said he would speak separately with Russian President Putin and Ukrainian President Zelenskyy on Monday.
US Consumer Confidence Hits Three-Year Low in May
US consumer confidence deteriorated further in May, with one-year inflation expectations surging to their highest level since 1981, driven by heightened concerns about the impact of President Trump’s trade policies. The University of Michigan’s Consumer Sentiment Index fell from 52.2 in April to 50.8 this month, the lowest since June 2022. Economists surveyed by Reuters had expected the index to rise to 53.4. Consumers’ 12-month inflation expectations jumped from 6.5% in April to 7.3%, the highest since November 1981.
Trump Says Iran Needs to Act Quickly on Nuclear Proposal; Iran Denies Receiving US Proposal
Trump stated that Iran has received a US proposal on its nuclear program and knows it needs to act swiftly to resolve the decades-long dispute. However, Iranian Foreign Minister Araghchi posted on social platform X that Tehran has not received a US proposal and that Iran will not abandon its right to peacefully use uranium enrichment.
