Dear copiers, investors and followers,
May 2025 was marked by a series of financial events that significantly impacted the markets and our portfolio. Among the key developments were the escalation and subsequent reversal of U.S. tariffs on Europe, the Moody’s downgrade of the U.S. sovereign rating, the poor outcome of a Treasury auction, and, most notably, the landmark ruling by the U.S. Court of International Trade effectively blocking the Trump administration’s protectionist measures.
Tensions peaked on May 23, when Donald Trump—firmly stating he was "tired of waiting"—announced his intention to impose broad tariffs on European products starting in June, once again placing trade conflict at the center of global geopolitics. Just days later, the White House suspended the measure, postponing it at least until July and reopening diplomatic negotiations with Brussels. This series of announcements and reversals fueled major volatility in both equities and the dollar, heightening uncertainty among market participants and businesses.
At the same time, a U.S. Treasury bond auction saw notably weak demand, falling well short of Wall Street expectations. Market operators interpreted this as a clear sign of rising skepticism toward U.S. fiscal stability, with deficit concerns and fears of future regulatory and political shocks. The immediate consequence was a spike in yields, downward pressure on the dollar.
Adding to the vulnerability, Moody’s downgraded the U.S. sovereign debt rating. The report cited internal political tensions, uncertainty regarding tariff policy, complex federal debt management, and anticipated slower growth as the main risk factors. The downgrade, widely covered by international financial media, accelerated Treasury selling and placed additional pressure on the USD exchange rate.
The true regulatory turning point came yesterday, when the U.S. Court of International Trade ruled Trump’s new “reciprocal” tariffs unconstitutional. The court ordered the suspension of the tariffs within 10 days, finding the White House lacked legal authority under the IEEPA and highlighting the absence of sufficient justification under international trade law. This decision drastically reduced the threat of aggressive tariff policies and helped ease market tensions.
I still believe that the United States has the potential to emerge from this period of crisis, despite the significant instability introduced into the system over the past two months. It remains the strongest market in the world, and for this reason, I continue to have confidence in the dollar and U.S. government bonds. As someone once said, “Never bet against America.”
Ad maiora... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
Excellent and thorough update, clear in outlining how political and legal shifts are directly impacting market sentiment and positioning. Navigating this volatility with discipline is key. Long-term, these events may prove to be inflection points rather than setbacks.... Show More
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