Limit Up! 22nd May 2025

Ian Reynolds May 21, 2025

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Overnight

Economic Indicators Released Overnight

UK inflation flips higher in April as household bills rise. In Japan the trade deficit continues to confirm that the country no longer can rely on selling things abroad. See Germany.

UK inflation jumps to 3.5% in April [FT]

A disaster of a US 20 year auction pushed longer dated yields higher and into red alert territory. This follows a similar wreck of a Japanese auction this week. All western economy long rates are pushing higher now, even with rate cuts priced in. Tuesday's cut of 25bps in Australia has seen 10 year rates higher for example. Remember when the FED cut a 100bps and the bond markets pushed 10 year yields up 120bps last year. This story continues as investor confidence continues to be eroded by excessive debt levels, credit downgrades and politicians on a continued spending frenzy.

The US is attempting to shore up the treasury market by changing the SLR and allowing banks to buy more paper.

Republicans Urge Fed to Alter Supplementary Leverage Ratio [Bloomberg]

However right here, right now, Trump is pushing more spending and more debt through, and it's the tipping point for markets.

The 'Big, Beautiful Bill' Will "Massively" Increase Near-Term Deficits, Add $5 Trillion In Debt [Zerohedge]

US stocks rolled over breaking a very long bull run.

US Equities

Breaking

Yields Soar, Stocks Plunge After Ugly 20Y Auction Sees Biggest Tail Of 2025 [Zerohedge]

Bonds

Nothing matters more than the 10 year chart and it's what Scott Bessent is having nightmares about currently. The break above the neckline, if confirmed, would produce a target of 5.25%. Markets will have forced FED / Treasury to do something to stop the carnage before we get there.

US 10 Year Government Bond Yield Daily