The anxious cocktail of mounting debt, shaken investor confidence, and the unnerving whiff of political brinkmanship has brought futures down this morning. Dow E-minis slipped 0.8%, S&P 500 futures dropped 0.5%, and Nasdaq 100 futures retreated by 0.6% - a clear reflection of investor unease amid mounting fiscal uncertainty.

The U.S. government's credit rating downgrade by Moody's has done more than blemish Washington's financial reputation - it's pierced the psychological armor of a marketplace already shell-shocked by erratic fiscal behavior and ballooning deficits. As bond yields climb, investors aren't just adjusting their portfolios; they're adjusting their expectations for the future of the American economy.

When a sovereign credit rating falls, it echoes beyond finance. It's not just about Treasurys and term premiums - it's a narrative disruption. Investors are spooked not only by the downgrade but by what it portends: the fading allure of U.S. debt in an increasingly wary global market. Rumors swirl about foreign buyers - those dependable custodians of Treasury stability - quietly eyeing the exits. Add in a $3-5 trillion tax-and-spending bill and you've got a recipe for long-end yields to spike, dragging equity valuations down with them like ballast. Trump's tax ambitions - while politically strategic - risk detonating the very deficit his tariffs are inflating. The irony? Fiscal conservatives now find themselves defending a bill that could add trillions to a debt already shadowed by interest payments and demographic pressures. The GOP, fractured and fatigued, risks failing its own ideological stress test.

Globally, the reverberations are just as unsettling. The dollar is floundering, stripped of its sanctuary status by uncertainty and downgrade trauma. Sterling - buoyed by sticky U.K. inflation and a reluctant Bank of England - is suddenly the unlikely hero of the forex market. 

The existential question looming over all of this isn't just whether stocks will recover or if bond yields will stabilize. It's whether the idea of the United States as the world's financial cornerstone can survive its own political dysfunction.

Oil climbed, not on economic demand, but on fears of a geopolitical spark between Israel and Iran. There are renewed fears of Israeli military action against Iran's nuclear facilities. Even unconfirmed, these reports have jolted oil traders into action, sending crude prices climbing back to $66.50 per barrel - a level not seen since last week, but still notably shy of the $80 peak reached on January 15. The revival in oil prices underscores how geopolitical risk, long dormant, is beginning to reassert itself in energy markets. Central to the uncertainty is the delicate dance between Washington and Tel Aviv. The Biden administration is reportedly engaged in backchannel diplomacy with Tehran, aiming to defuse tensions and rein in Iran's nuclear ambitions. Yet the spectre of unilateral Israeli action, potentially undermining US negotiations, looms large. Overlaying all of this is Donald Trump's unmistakable strategic priority: to drive oil prices lower. Crude, after all, acts as a release valve for his broader economic agenda - particularly his penchant for using tariffs as both economic cudgel and diplomatic leverage. His recent visit to Saudi Arabia, where he offered a windfall of arms contracts in return for increased oil output, exemplifies this transactional approach. The alleged reward? Not just promises of greater supply, but, if reports are to be believed, a private jet gifted by Qatar - neighbourly diplomacy, Gulf-style.

Finally, on a more anecdotal note, the New York stock market ended yesterday with a moderate decline after six sessions in the green. Eight of the ten largest market capitalizations fell, particularly the tech sextet of Microsoft, Nvidia, Apple, Amazon, Alphabet, and Meta. Europe regained ground against Wall Street yesterday. The Stoxx Europe 600 gained 0.7% and is now up 9% in 2025, compared with 1% for the S&P 500. Since its low on April 9, the broad European index has fallen only five times in 27 sessions. Yesterday, it benefited mainly from investors shifting to defensive sectors. When tobacco, utilities, and telecoms stocks start to top the charts, it means that financiers are not entirely comfortable with the situation.

In Asia-Pacific, all markets traded in positive territory, except for Japan. European leading indicators are slightly bearish.

Today's economic highlights:

On today's agenda: in the United Kingdom, the CPI GM and the CPIH GA; in the United States, the DOE crude oil inventories; in Japan, the adjusted trade balance. See the full calendar here.

  • Dollar index: 99,650
  • Gold: $3,309
  • Crude Oil (BRENT):$66.19 (WTI) $62.93
  • United States 10 years: 4.51%
  • BITCOIN: US$107,465

In corporate news:

  • Tesla plans a robotaxi trial in Austin, Texas, by the end of June.
  • Super Micro Computer is expanding its U.S. server production.
  • Nvidia partnered with Foxconn for a 100 MW AI data center in Taiwan.
  • Epic Games' Fortnite returned to Apple's App Store in the US.
  • Home Depot maintains its pricing strategy and reaffirms fiscal 2025 guidance.
  • Google launches a new online search mode with enhanced artificial intelligence.
  • Apple opens its AI models to developers, betting that this will stimulate the creation of new applications.
  • Elon Musk says he wants to remain CEO of Tesla and reduce his political spending.
  • Kraft Heinz is looking for merger and acquisition opportunities to accelerate value creation.
  • The US is preparing to extend the exemption granted to Chevron in Venezuela by 60 days, according to Bloomberg.
  • Ford Motor is scaling back its electric vehicle ambitions by allowing Nissan to use part of its flagship battery plant in the US, according to the WSJ.

Analyst Recommendations:

  • Eaton Corporation Plc: Oxcap Analytics downgrades to underweight from equalweight with a target price reduced from USD 290 to USD 267.45.
  • The Home Depot, Inc.: Stifel upgrades to buy from hold with a price target raised from USD 405 to USD 425.
  • Unitedhealth Group Inc.: HSBC downgrades to reduce from hold with a price target reduced from USD 490 to USD 270.
  • Abercrombie & Fitch Co.: Jefferies maintains its buy recommendation and reduces the target price from USD 170 to USD 135.
  • Dell Technologies Inc.: Morgan Stanley maintains its overweight recommendation and raises the target price from USD 89 to USD 126.
  • Slm Corporation: Morgan Stanley maintains its overweight recommendation and raises the target price from USD 33 to USD 40.
  • Tenet Healthcare Corporation: Baird maintains a neutral recommendation with a price target raised from 137 to USD 195.