US Deficit Jitters Roil Markets as Yields Surge, Dollar Sinks, Bitcoin Hits Record

Action Insight Daily 5-22-25

US Deficit Jitters Roil Markets as Yields Surge, Dollar Sinks, Bitcoin Hits Record

The dominant driver in global markets at the moment is rising concern over the US fiscal deficit. 30-year yield surged toward 5.1% overnight, its highest level since October 2023. 10-year yield also breached the 4.6% mark for the first time in months. Equity markets responded accordingly, with major US indexes closing sharply lower. Gold has broken above 3330, supported additionally by geopolitical uncertainty. Bitcoin hit a new all-time high. Both reflected risk-hedging demand and a search for alternatives.

In the currency markets, Dollar is suffering, now the worst performer among majors for the week. Meanwhile, commodity currencies like Aussie, Kiwi, and Loonie are struggling near the bottom of the FX board, a reflection of broader risk aversion. Yen leads the pack, joined by Swiss Franc and Euro, as investors seek safety outside the US. Sterling is trading in the middle.

This spike in long-dated yields has sent a clear signal: investors are becoming increasingly uneasy about the US's worsening debt profile and its implications for long-term stability. A poorly received 20-year bond auction only amplified these fears, fueling speculation that appetite for US debt is waning just as supply pressures are set to increase.

On the trade front, tensions remain high. Japan’s Finance Minister Katsunobu Kato labeled recent US tariffs as “regrettable” and reiterated Tokyo's position that no trade deal would be worthwhile unless automobile duties are scrapped. At the G7 meeting in Banff, Kato and US Treasury Secretary Scott Bessent agreed that the dollar-yen exchange rate should reflect market fundamentals. However, the lack of concrete progress raises doubts over any near-term breakthrough in US-Japan trade talks.....

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Top Movers | HeatMap | Pivot Points | Pivot Meters | Action Bias | Vol

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1286; (P) 1.1324; (R1) 1.1369; More...

EUR/USD's rally from 1.1064 is in progress and intraday bias stays on the upside. Correction from 1.1572 could have completed at 1.1064 already. Further rise should be seen to retest 1.1572 high first. Firm break there will resume larger up trend. Next near term target will be 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. On the downside, break of 1.1217 minor support will delay the bullish case and turn intraday bias neutral again.

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EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD

EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY

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Economic Calendar
GMT Ccy Events Actual Forecast Previous Revised
23:00 AUD Manufacturing PMI May P 51.7 51.7
23:00 AUD Services PMI May P 50.5 51
23:50 JPY Machinery Orders M/M Mar 13.00% -1.60% 4.30%
00:30 JPY Manufacturing PMI May P 49 49 48.7
00:30 JPY Services PMI May P 50.8 52.4
06:00 GBP Public Sector Net Borrowing (GBP) Apr 17.7B 16.4B
07:15 EUR France Manufacturing PMI May P 48.9 48.7
07:15 EUR France Services PMI May P 47.7 47.3
07:30 EUR Germany Manufacturing PMI May P 49 48.4
07:30 EUR Germany Services PMI May P 49.5 49
08:00 EUR Eurozone Manufacturing PMI May P 49.4 49
08:00 EUR Eurozone Services PMI May P 50.4 50.1
08:00 EUR Germany IFO Expectations May 88.3 87.4
08:00 EUR Germany IFO Current Assessment May 87 86.4
08:00 EUR Germany IFO Business Climate May 87.7 86.9
08:30 GBP Manufacturing PMI May P 46.2 45.4
08:30 GBP Services PMI May P 50 49
11:30 EUR ECB Meeting Accounts
12:30 CAD Industrial Product Price M/M Apr -0.50% 0.50%
12:30 CAD Raw Material Price Index Apr -2.20% -1%
12:30 USD Initial Jobless Claims (May 16) 230K 229K
13:45 USD Manufacturing PMI May P 50.2
13:45 USD Services PMI May P 50.8
14:00 USD Existing Home Sales Apr 4.10M 4.02M
14:30 USD Natural Gas Storage 118B 110B