May 28 Financial Breakfast: Yields on long-term bonds in the US, Japan, and Germany decline, gold precariously holds above 3300, and US stocks rise across the board

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Both Europe and the United States have agreed to expedite trade negotiations, with the U.S. expected to reach several new trade agreements this week, with India possibly being one of them. The U.S. consumer confidence index rose in May. In the bond market, the Japanese government plans to reduce the issuance of ultra-long-term government bonds, while the yields on long-term bonds in the U.S., Japan, and Germany have significantly declined, alleviating concerns in the bond market. All three major U.S. stock indices rose, with the Dow Jones up 1.78%; the S&P 500 up 2.05%; and the Nasdaq up 2.47%; the China Golden Dragon Index retreated 0.28%.

In terms of popular stocks, Elon Musk emphasized the need to focus all attention on Tesla's business, with Tesla's stock price closing up 6.9%; Nvidia, which will announce earnings later this week, rose 3.2%; both Apple and Microsoft rose over 2%.

The U.S. dollar index rose 0.63% to 99.60. The USD/JPY surged 1.06%, returning above 144.0, while the EUR/USD fell 0.52%, facing resistance at 1.1400. Gold fell sharply from a high of 3350, dropping 65 dollars to 3285 dollars, and then barely recovered to the 3300 mark; WTI crude oil fell 1.12% to 61.07 dollars; Bitcoin fell 0.3%, remaining below 110,000 in consolidation, while Ethereum rose 3.66% to 2657 dollars.

Macro News

Japan may reduce ultra-long bond issuance, U.S., Japan, and Germany long bond yields decline

The Japanese government is considering reducing the issuance of ultra-long-term bonds to alleviate market concerns about a potential deterioration in the Japanese government's fiscal situation. Recently, the yields on Japanese ultra-long-term bonds have reached record levels, primarily due to a decrease in demand from traditional buyers such as life insurance companies.

Japan's potential reduction in bond issuance may lead investors seeking to purchase long bonds to turn to U.S. Treasuries, alleviating concerns about a sell-off in the global bond market. The yield on U.S. 30-year Treasuries fell 1.61%, and the 10-year yield fell 1.35%; the yield on Japan's 30-year government bonds fell 6.5%; and Germany's 30-year yield fell 1.97%, all recording declines for three consecutive days.

Bank of Japan hints at further rate hikes, Japan loses status as the world's largest creditor for the first time in 34 years

Bank of Japan Governor Kazuo Ueda hinted that he would continue to raise the benchmark interest rate if the economy improves as expected. Ueda stated at a meeting hosted by the Bank of Japan that Japan is currently facing a new round of supply shocks in the form of rising food prices. The central bank's basic view is that the impact of rising food prices is expected to weaken, but considering that the core inflation rate is closer to 2% than it was a few years ago, a cautious assessment of the transmission effect of food price inflation on core inflation is necessary.

Ueda also mentioned that due to increasing uncertainty, especially related to trade policy, the central bank recently downgraded its economic and inflation forecasts, but still expects the core inflation rate to gradually approach 2% in the latter half of the forecast period.

Japan's net foreign assets reached a record high, but it still lost its status as the world's largest creditor for the first time in 34 years. Data from the Japanese Ministry of Finance shows that last year, Japan's net foreign assets reached a record 533.05 trillion yen, an annual increase of about 13%, marking the seventh consecutive year of growth, primarily benefiting from the weak yen and strong demand for Japanese companies' overseas mergers and acquisitions However, Japan has lost its position as the world's largest creditor nation for the first time in 34 years, surpassed by Germany. Germany's net foreign assets during the same period amounted to 569.7 trillion yen.

The Federal Reserve engages in a "healthy debate" on inflation outlook

Federal Reserve officials revealed that there is currently a "healthy debate" within the Federal Reserve regarding the impact of inflation, whether it should be viewed as a temporary shock or a more persistent condition. Some Federal Reserve officials advocate considering the impact of tariff policies as a temporary inflation shock and prioritize supporting U.S. economic growth through interest rate cuts; while others believe that the medium to long-term effects of tariffs may still be unclear, necessitating a more cautious monetary policy.

Neel Kashkari, president of the Minneapolis Federal Reserve Bank, reiterated that in the face of uncertainty caused by the trade war and the "critical" task of defending inflation expectations, the Federal Reserve must adopt a prudent approach. Kashkari stated that negotiations may take months or even years to conclude completely. Tariffs on intermediate goods will take time to transmit to final prices, and as time goes on, the risk of inflation expectations becoming unanchored may increase.

Easing of U.S.-Europe trade tensions, several trade agreements may be reached this week

European Commission President Ursula von der Leyen stated last weekend that the EU is prepared to advance negotiations swiftly and decisively. U.S. President Trump described the EU's proposal to initiate talks as a positive development, expressing hope that Europe would open its markets for trade with the U.S. Trump had previously agreed to postpone the implementation of a 50% tariff on EU goods until July 9. However, he stated that if an agreement cannot be reached or if he feels unfairly treated, he reserves the right to set a deal for European exports to the U.S.

Kevin Hassett, director of the White House Council of Economic Advisers, told CNBC that we will see more agreements, with several possibly emerging even this week. India is one of the countries close to reaching an agreement, and tariffs for some countries may be reduced to 10% or lower.

U.S. durable goods orders fell 6.3% in April, consumer confidence index rebounded in May

U.S. durable goods orders fell 6.3% in April, dropping to $296.3 billion, marking the largest decline since January 2024, but slightly better than the market expectation of a 7.8% drop. The previous value was revised down to an increase of 7.6%. This decline was influenced by the implementation of comprehensive 10% reciprocal tariffs during that period, as well as weakened demand for goods following advance orders in the previous month. New orders for non-defense capital goods excluding aircraft (a measure of business spending) fell 1.3%. In April, U.S. factory orders for business equipment recorded the largest decline since October of last year. Under the influence of tariff and tax policy uncertainties, corporate investment willingness is weakening.

Data from a survey released on the 27th by the U.S. research organization Conference Board showed that, influenced by the latest developments in trade situations, the U.S. consumer confidence index rebounded from 85.7 in April to 98 in May, exceeding market expectations and ending a consecutive decline over the previous five months, indicating a significant improvement in consumer sentiment regarding the overall economic situation Market Overview

U.S. Stocks: All three major U.S. stock indices rose, with the Dow Jones up 1.78%, the S&P 500 up 2.05%, and the Nasdaq up 2.47%.

European Stocks: European stock markets generally rose, with the German DAX 30 index up 1.02%. The French CAC 40 index fell 0.02%. The UK FTSE 100 index rose 0.73%.

Bond Market: The yield on the U.S. 10-year benchmark government bond is about 4.45%, down 5 basis points from the previous trading day.

Commodities: Gold fell 1.69%, priced at $3,300 per ounce. WTI crude oil fell 1.12%, priced at $61.07 per barrel.

Foreign Exchange: The U.S. dollar index rose 0.63%, priced at 99.5. USD/JPY rose 1.06%, while EUR/USD fell 0.52%.

Cryptocurrency: Bitcoin fell 0.45% in the last 24 hours, currently priced at $108,886. Ethereum rose 3.81% in the last 24 hours, currently priced at $2,657.3.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 23,328 points, up 50 points, which is 54 points lower than yesterday's Hang Seng Index closing of 23,381 points, with a turnover of 13,194 contracts. The National Index night market futures closed at 8,462 points, 8 points lower than yesterday's National Index closing.

Global Company News

NVIDIA's suppliers accelerate rack production for AI data centers

According to the Financial Times, sources revealed that after resolving technical issues that caused shipping delays, NVIDIA's suppliers are accelerating the production of racks for its flagship AI data centers. Partners such as Foxconn, Inventec, Dell, and Wistron have achieved a series of technological breakthroughs and have begun shipping AI servers based on NVIDIA's Blackwell architecture.

TSMC rises over 1.7% as it issues a statement against U.S. chip tariffs

TSMC rose over 1.7%, priced at $195.35. Recently, TSMC sent a letter to the U.S. government warning that if the U.S. insists on imposing import tariffs on chips, it will affect the company's investment plans in Arizona. In the letter, TSMC strongly suggested that other companies that have committed to investing in semiconductors in the U.S. should be exempt from tariffs and regulations, mentioning that many materials and equipment in the supply chain have no substitutes in the U.S.

Trump Media raises $2.5 billion in financing to purchase Bitcoin

Trump Media (DJT.US) announced on Tuesday that it has reached subscription agreements with about 50 institutional investors to issue and sell approximately $1.5 billion in common stock and $1 billion in principal zero-coupon convertible preferred secured notes to acquire $2.5 billion and create a Bitcoin inventory. The company added that Crypto.com and Anchorage Digital will provide custody for its Bitcoin inventory.

Today's Key Events Preview

Federal Reserve's Williams participates in a panel discussion at the Bank of Japan's Financial Research Institute conference.

U.S. Vice President Pence speaks at the Bitcoin 2025 conference The 39th OPEC and non-OPEC oil-producing countries ministerial meeting was held.

The Federal Reserve announced the minutes of the May monetary policy meeting.

Australia's April weighted CPI year-on-year.

The Reserve Bank of New Zealand announced the interest rate decision and monetary policy statement.

France's first quarter GDP year-on-year final value.

Germany's May seasonally adjusted unemployment rate.

Switzerland's May ZEW investor confidence index.

The U.S. Richmond Fed manufacturing index for May.

U.S. API crude oil inventories for the week ending May 23