Nick Goold
Markets started last week lower after Moody’s downgraded the U.S. credit rating, pointing to rising debt and unclear fiscal policy. This hurt confidence and pushed down U.S. Treasuries and the dollar. Both U.S. and Japanese stocks slipped slightly as investors waited for progress on trade talks. The UK and EU announced a trade deal, which helped the euro and pound. The week ended with the negative news that Trump threatened new tariffs on the EU and Apple, reviving trade war concerns.
Gold rose strongly as investors looked for safety due to U.S. debt worries and a weaker dollar. The Reserve Bank of Australia cut rates by 0.25%, as expected. U.S. economic data was solid, with Manufacturing PMI and New Home Sales beating forecasts, though market reaction was muted. In Japan, April inflation rose to 3.5%, slightly above expectations, raising the chance of a future rate hike.
Bitcoin jumped above $110,000 after breaking past resistance at $105,000, leading to fresh buying and stronger momentum. It was a quiet week overall for the markets, with few major updates on trade or policy, as announcements from Trump remained the main driver of market sentiment.
Markets This Week
U.S. Stocks
Last week's close below the 10-day moving average is a negative sign for U.S. markets. With Trump again threatening tough trade actions, more negative headlines could weigh on sentiment this week. After Monday’s holiday, selling opportunities may be the best approach. Support is seen at $41,000 and $40,500, while resistance stands at $42,500, $42,800, and $43,000.
Japanese Stocks
A stronger yen and hotter-than-expected inflation data are weighing on the Nikkei 225. The index has underperformed, and while indicators look sideways, the risk of further downside is growing. Selling on rallies or after a break of support looks appropriate this week. Support is at 36,500円 and 36,000円, with resistance at 38,000円, 39,000円, and 40,000円.
USD/JPY
USD/JPY is under pressure as concerns over U.S. debt continue to drag on the dollar. The pair is approaching key support at 142.00, and although momentum is weak, the market is short-term oversold. Buying near 142.00 could offer short-term profits, while selling near resistance at 144.00 or 145.00 may also work. Resistance lies at 144.00, 145.00, 146.00, and 148.00, with support at 142.00, 140.00, 139.50, and 137.00.
Gold
Gold rebounded as the U.S. dollar index dropped below 100, renewing demand for safe-haven assets. However, daily indicators are flat, and short-term buying could be risky at these levels. The risk of more negative trade headlines remains, so the focus should be on buying into weakness. Support is seen at $3,250, $3,200, and $3,150, with resistance at $3,400, $3,435, and $3,500.
Crude Oil
Crude oil failed again at $65 resistance last week despite a weaker dollar helping sentiment. Prices remain stuck in a $60–$65 range, and for now, range trading is still the most effective strategy, with a bias toward weakness. Resistance is at $65 and $67.50, while support sits at $60 and $55.
Bitcoin
Bitcoin remains in a strong uptrend, even after some profit-taking at the end of last week. As long as prices hold above $105,000, the bullish trend remains intact, and buying on dips looks favorable. Support is at $105,000, $100,000, $95,000, and $90,000, with resistance at $110,000, $112,500, and $115,000.
This Week’s Focus
Tuesday: U.S. Durable Goods Orders, U.S. Consumer Confidence
Wednesday: U.S. FOMC Minutes
Thursday: U.S. GDP
Friday: U.S. Core PCE Price Index, Chicago PMI, Michigan Consumer Sentiment
With holidays in the U.S. and UK on Monday, the week may start off quietly. But volatility could pick up quickly if President Trump puts pressure on Europe or other countries over trade. Several Federal Reserve officials will give speeches during the week, which could move markets. The Bank of England governor is also scheduled to speak.
Crude oil traders should watch the OPEC meeting, where top oil producers will discuss future supply — this could affect oil prices. While important U.S. data like GDP, inflation, and consumer sentiment will be released, political news and central bank comments may have a bigger effect on the markets.
Trouble in the U.S. Bond Market
The U.S. bond market is in trouble, and traders should take note. Since April, bond prices have dropped sharply, pushing up long-term rates. This impacts all financial markets. Moody’s recently downgraded the U.S. credit rating, citing fast-growing debt and unclear policies, further shaking investor confidence.
Why the Bond Market Matters
The U.S. government borrows money by selling Treasury bonds. Investors around the world—like banks, governments, and large funds—buy them. The problem is: if investors stop buying U.S. bonds, the government must offer higher interest rates to attract buyers. That makes it more expensive for the U.S. to borrow money. It also raises costs for home loans, business loans, and credit cards, slowing down the economy.
At the same time, the U.S. dollar is weakening. The U.S. dollar index is down over 8% in 2025, sitting below 100 and at a 4-year low. Since most global trade uses U.S. dollars, this loss of trust could hurt the entire financial system.
What’s Going Wrong in the Bond Market?
Bond yields are rising quickly, with the 10-year over 4.5% and the 30-year above 5%. This means investors are demanding higher returns to hold U.S. bonds. That’s a sign of worry. Here’s why:
1. Debt is rising too fast
Trump’s new tax cuts will add trillions more to the U.S. debt. The country is now running yearly deficits of around $2 trillion, and total debt could pass $36 trillion soon.
2. Credit downgrade
Moody’s downgrade hurt trust in U.S. bonds, making them less attractive.
3. Fewer foreign buyers
Countries like China and Japan—which hold a lot of U.S. debt—are said to be selling bonds. That pushes bond prices down and yields up.
4. Higher interest costs
When bond yields rise, loan and mortgage rates go up too. That makes it harder for people and businesses to borrow and spend.
5. Stagflation worries
Traders are worried about stagflation—when the economy slows but prices keep rising.
6. Loss of safe haven status
U.S. bonds were always seen as the safest investment in the world. Now, more investors are buying German and Japanese bonds instead.
How the Bond Market Is Pushing Back on Trump
The bond market can do more than just reflect economic problems—it can push back against bad policy. At the start of April, Trump announced new tariffs, and the bond market didn’t like it. Yields on 10-year and 30-year U.S. bonds jumped nearly 0.50% in just one week. That meant higher borrowing costs for the U.S. and sent a strong message to the government.
The pressure from the bond market forced Trump to be less aggressive and return to the negotiation table. This shows how much power bond investors have. If they don’t like a policy, they can sell bonds, and that makes it more expensive for the U.S. to borrow money.
Will Trump Beat the Bond Market?
Trump has introduced many bold policies—from trade tariffs to tax cuts—that have often worried financial markets. These moves have caused sharp drops in U.S. stocks, the U.S. dollar, and even Treasury bonds. While there’s reason to be concerned, it's also clear that Trump usually backs off when needed. His style is to negotiate aggressively, but in the end, he wants to protect the U.S. economy.
Still, the bond market is bigger than Trump. If long-term interest rates keep rising, it could seriously hurt the economy. Borrowing would become more expensive, and that would slow everything down. Trump knows this. Many of his supporters are wealthy businesspeople who own U.S. assets. So keeping markets strong is in his own best interest.
If bond yields spike again, expect Trump to adjust his policies to avoid a debt crisis and keep investors calm. This kind of back-and-forth creates high volatility—and that means plenty of trading opportunities.
Why This Matters — and How Traders Can Take Advantage
Bond market trouble affects all markets. Falling bond prices and rising yields can weaken the U.S. dollar, hurt stocks, and trigger big moves if confidence breaks. Trump may shift policy to avoid crisis, but that could increase volatility. With rising trade tensions, countries like China and Japan may sell U.S. debt, making things worse. For traders:
- Sell the dollar or U.S. stocks fast on bad headlines
- Use big profit targets when selling — drops can be sharp
- Buy patiently, using trailing stops to lock in gains
Key Markets to Watch:
Gold
Gold hit record highs in 2025. It’s been calm recently, but if bond yields rise or the dollar weakens, gold could jump again. It’s a go-to asset during uncertainty.
U.S. Dollar Index
The dollar index is stuck near the 100 level. If it breaks lower, it could start a new downtrend. A strong rebound could start a rally. Trading the index is often easier than picking currency pairs in volatile conditions.
U.S. vs. Global Stocks
U.S. stocks have been strong, but some traders are now favoring European and Asian markets. You can trade this by selling U.S. indices like the S&P 500 and buying the Nikkei 225 or DAX—trading the difference between regions.
The U.S. bond market is under pressure from rising debt, weak demand, and foreign selling—hurting investor confidence. For traders, this brings both risk and opportunity. If yields keep rising, the dollar and stocks could drop fast, but sharp moves in gold, currencies, and global indices may offer strong setups. Watch bond yields, the dollar index, and political headlines closely—the bond market drives everything.
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