U.S. stock futures dropped on Monday. The dollar also weakened. Treasury yields rose after Moody’s cut America’s credit rating. Investors grew more cautious about U.S. economic policy.
Asian Markets Slide on Mixed Data
Asian shares fell in early trading. China released mixed figures showing weak retail sales and slowing factory output. The data suggested China’s economy still struggles. U.S. tariffs have begun to weigh on Chinese exports.
U.S. Treasury Secretary Pushes Back
In a Sunday TV interview, Treasury Secretary Scott Bessant rejected Moody’s warning. He said investors should not doubt U.S. credit. At the same time, he warned trade partners they could face steep tariffs if talks do not proceed “in good faith.”
Debt Concerns and Tax Cuts
Republicans are close to approving large tax cuts. Some analysts warn the plan could add $3 trillion to $5 trillion to U.S. debt over ten years. This raises fresh fears about the $3.6 trillion national debt.
Tariff Uncertainty Weighs on Growth
Markets are unsure how U.S. tariffs will evolve. JPMorgan economist Michael Feroli noted that the current 13% effective tariff acts like a 1.2% tax on GDP. He said higher tariffs and policy uncertainty may slow growth.
Fed Rate Outlook Shifts
The 10-year Treasury yield climbed another 7 basis points to 4.51%. Futures now show just a 33% chance of a Fed rate cut in July. That probability rises to 72% by September. Several Fed officials, including New York Fed President John Williams, are due to speak this week.
Currency and Commodity Moves
The dollar slid further amid trade-policy jitters. The euro rose to $1.1184. The yen strengthened to ¥145.19 per dollar. Gold gained 0.6% to $3,222 an ounce. Oil prices fell on worries about higher OPEC and Iranian output. Brent crude dipped to $65.05 a barrel, while U.S. crude fell to $62.18 a barrel.
