The Day at a Glance | May 20 2025

• The Federal Reserve remains cautious following the credit rating downgrade.

• President Donald Trump is expected to visit Capitol Hill on Tuesday to meet with Republican lawmakers as they work toward an agreement on a broad tax-cut package.

• China cut its benchmark interest rates for the first time since October, while major state-owned banks lowered deposit rates in a coordinated effort by authorities to ease monetary policy and cushion the impact of the trade war on the economy.

• China accused the U.S. of violating the recent tariff agreement following warnings related to Huawei, demanding that Washington rectify the situation to preserve what was agreed upon during negotiations in Geneva.

• The European Union and the United Kingdom announced new sanctions against Russia on Tuesday—without waiting for the U.S. to join—just a day after President Donald Trump spoke with Vladimir Putin without securing a ceasefire agreement in Ukraine.

• Oil prices stabilized on Tuesday amidst ongoing uncertainty in U.S.–Iran negotiations and Russia–Ukraine peace talks, while new government data painted a cautious outlook for China’s economy, the world’s largest crude importer.

Economic Environment

The Federal Reserve is responding cautiously to the recent downgrade of the U.S. credit rating. Fed officials reacted prudently to Moody’s downgrade—the last of the major agencies to strip the U.S. of its top credit rating—citing concerns over the growing deficit and rising debt servicing costs. While the immediate impact on monetary policy is limited, officials acknowledge that higher financing costs could affect medium-term economic activity. The downgrade came amidst heightened uncertainty, marked by aggressive trade policies from President Trump, highspending levels, and a sharp market sell-off in equities, bonds, and the dollar on Monday. Overall, while the Fed doesn’t foresee an immediate policy shift, it recognizes that ongoing fiscal deterioration and political uncertainty could gradually tighten financial conditions and weaken investor confidence, warranting close monitoring of the evolving economic environment.

Markets and Companies

Major U.S. stock indices are posting slight declines on Tuesday after six consecutive sessions of gains for the S&P 500. In Europe and Asia, equity markets are trading higher. The tech sector is under pressure, with losses in stocks like Nvidia, Meta, Apple, and Microsoft. In contrast, Home Depot rose nearly 2% after maintaining its full-year sales growth guidance of 2.8% and ruling out price adjustments despite the impact of new tariffs. Investors are digesting ongoing uncertainty over the economic effects of U.S. tariffs and broader concerns about a potential economic slowdown. Despite this, the S&P 500 remains less than 3% below its all-time high.

In the bond market, U.S. Treasury yields edged slightly higher, with the 10-year yield at 4.51% and the 2-year yield at 3.99%. Investors continue to assess the Federal Reserve’s next steps, as markets absorb the recent downgrade of the U.S. credit rating by Moody’s, which now places the country at the second-highest rating level—following similar actions previously taken by S&P and Fitch.

Gold rose 0.2%, boosted by a weaker dollar and some optimism around U.S.–China trade relations and potential diplomatic progress in the Russia–Ukraine conflict. Meanwhile, oil prices posted moderate losses amidst stalled U.S.–Iran negotiations over Tehran’s nuclear program, which could limit Iran’s crude oil supply to global markets.

In Mexico, the exchange rate remained stable, trading around 19.29 pesos per dollar, after closing at 19.31 yesterday.

Yesterday afternoon, Livepol reported that during Nordstrom’s Special Shareholders’ Meeting held on May 16^th, the proposed merger between both companies was approved. This transaction is part of the agreement signed in December to acquire all of Nordstrom’s shares. The merger required the support of two-thirds of shareholders, as well as a simple majority excluding the buyers and company executives—both conditions were met. The deal is expected to finalize in the coming days.

Corporate News

• Home Depot maintained its full-year guidance, reaffirming its sales growth outlook. Additionally, its CFO stated that the company does not plan to raise prices despite the impact of tariffs, which was well received by the market.

• Uber Technologies announced a partnership with Waymo to boost autonomous ride services in Atlanta, reinforcing its commitment to innovation and driverless mobility.

• D-Wave Quantum unveiled its new quantum computing system, called Advantage2, generating excitement in the sector. Other companies in the space, such as Rigettiand Quantum Computing, also saw their shares rise following the announcement.