TL;DR

China, Australia cut rates; Moody’s downgrades U.S. credit; U.S. slashes China tariffs for 90 days.

Highlights

• China cuts 1-year Loan Prime Rate to 3.0% and major banks lower deposit rates; RBA reduces cash rate to 3.85%1.
• Moody’s downgrades U.S. sovereign credit to Aa1, citing $36T debt and 5.02% 30-year Treasury yield; U.S. equities like the Standard & Poor's 500 , Dow Jones Industrial Average and Treasuries (US Treasury 30 Year Bond ETF ) decline2.
• U.S. reduces tariffs on Chinese imports from 145% to 30% for 90 days; LA port imports drop 30%; GM halts U.S. vehicle exports to China318.
• UBS faces likely defeat in opposing Swiss law requiring up to $25B in extra capital; shares fall 3%10.
• China imports record 966 koz platinum (Platinum ) and 127.5 tons gold (gold ) in April; $17.3B capital inflow amid trade tensions15.
• Nippon Steel offers $14B U.S. investment (including $4B for new mill) to secure U.S. Steel merger approval; review deadline May 219.
• Indonesia suspends $8.1B Rafale jet deal after Indian Rafales downed and France refuses to share source codes11.
• UK imposes 100 new sanctions on Russia after major drone attack on Ukraine; EU to lift all sanctions on Syria48.
• India and Pakistan agree to withdraw troops to pre-conflict positions along the Line of Control by May 305.
• Argentina announces tax-free amnesty for up to $271B in undeclared U.S. dollars, aiming for “endogenous dollarization.”14
• Taiwan’s President Lai seeks talks with China, unveils sovereign wealth fund, and warns of Beijing’s “political warfare.”20

Commentary

Monetary policy in Asia-Pacific is turning more accommodative, with both China and Australia cutting policy rates to support domestic demand amid trade and growth headwinds. China’s LPR and deposit rate cuts reflect ongoing concerns over sluggish credit demand and the impact of U.S. trade tensions, while the RBA ’s move signals inflation risks are now more balanced. These shifts may support equities in the region but could weigh on local currencies as global rate differentials widen1.

Moody’s downgrade of U.S. sovereign credit to Aa1, driven by ballooning debt and higher yields, has triggered declines in both U.S. equities such as the Standard & Poor's 500 and Dow Jones Industrial Average , and Treasuries (US Treasury 30 Year Bond ETF ), with the 30-year yield at 5.02%. The move, following downgrades by Fitch and S&P in prior years, highlights persistent fiscal risks and could raise funding costs for both government and corporates. The downgrade also comes as U.S. mortgage rates top 7%, adding pressure to the domestic economy2.

Trade flows remain volatile. The U.S. has temporarily reduced tariffs on Chinese imports, but this has not reversed the sharp drop in LA port volumes. GM ’s halt of U.S. vehicle exports to China underscores the uncertainty for exporters, while retailers warn of higher prices and tighter inventories318. Meanwhile, China’s record imports of platinum and gold , alongside a $17.3B capital inflow, suggest strong demand for hard assets as hedges against currency and geopolitical risk15.

In corporate and geopolitical developments, UBS faces a likely regulatory setback over Swiss capital requirements, pressuring European financials10. Nippon Steel’s $14B U.S. investment proposal is a last-ditch effort to secure approval for its U.S. Steel acquisition ahead of a key review deadline9. Indonesia’s suspension of its Rafale jet deal following combat performance concerns impacts both Dassault and regional defense procurement11. The UK’s new sanctions on Russia and the EU’s lifting of all sanctions on Syria reflect divergent policy responses to regional conflicts48.

Traders should monitor U.S. bond and equity market reactions to the Moody’s downgrade, the effectiveness of Asian monetary easing, and ongoing volatility in U.S.-China trade. Precious metals may remain supported on safe-haven demand, while regulatory and geopolitical risks continue to drive sector and regional rotation.