TL;DR

US credit downgraded; China tariffs cut for 90 days; retail buys stocks, institutions sell.

Highlights

• Moody’s downgraded US sovereign credit from Aaa to Aa1; US dollar fell to multi-week lows, with institutional investors increasingly underweight 4.
• US and China agreed to a 90-day tariff reduction (145% to 30%); LA port imports from China down 30%, iPhone shipments from China to US dropped 72% YoY 313.
• China’s PBOC cut its Loan Prime Rate to 3.0%; major Chinese banks and Australia’s RBA also lowered rates, signaling regional monetary easing 2.
• Trump announced immediate Russia-Ukraine ceasefire talks after call with Putin; Kremlin signals process will be lengthy 5.
• UK and EU imposed new sanctions on Russia, targeting shadow fleet vessels and financial/energy sectors, after Russia’s largest drone attack on Ukraine 69.
• Israel to assume full control of Gaza, resumes limited aid under diplomatic pressure; Gaza death toll exceeds 53,000 8.
• US Senate advanced the GENIUS Act for stablecoin regulation; Tether close to surpassing Germany in US Treasury holdings as stablecoin market hits $244B 1011.
• BlackRock increased crypto holdings ($305.9M BTC, $8.65M ETH); spot crypto ETFs saw $667.4M net inflows 18.
• Retail investors bought $50B in US equities since April 8, but institutions are net sellers; Gold ETF (GLD) saw $2B outflow last week 17.
• Home Depot Q1: sales beat, EPS miss; reaffirmed 2025 targets, no tariff-driven price hikes planned 14.
• UBS shares fell 3% amid likely defeat on Swiss capital requirement challenge; faces $25B capital increase 15.
• Nike announced layoffs in technology division, shifting some operations to vendors as part of restructuring 20.

Commentary

US markets face a cautious open as Moody’s downgrade of US sovereign credit to Aa1 weighs on sentiment, with the dollar broadly weaker and institutional investors increasing underweight positions in US assets 4. The downgrade, combined with ongoing fiscal and trade uncertainty, is prompting renewed scrutiny of US Treasuries and could drive further volatility in rates and FX.

Trade dynamics remain in focus. The US-China 90-day tariff reduction offers only partial relief: LA port volumes remain sharply lower, and Chinese iPhone shipments to the US have collapsed, highlighting persistent supply chain disruptions 313. Retailers are warning of higher prices and lower inventories, while Apple is accelerating its production shift to India 13. Meanwhile, Asia-Pacific central banks are moving to support growth, with China and Australia both cutting rates—potentially providing some support to risk assets, but also reflecting regional economic headwinds 2.

Geopolitical risk remains elevated. Trump’s announcement of Russia-Ukraine ceasefire talks is a headline positive, but the Kremlin’s measured response and new UK/EU sanctions on Russia suggest little immediate de-escalation 569. In the Middle East, Israel’s move to fully control Gaza and resume limited aid underlines ongoing instability, with humanitarian and diplomatic pressures mounting 8.

Crypto and equity flows diverge: BlackRock and other institutions are increasing crypto exposure, and the Senate’s progress on stablecoin regulation is a tailwind for digital assets and US Treasury demand via stablecoins 101118. Retail dip-buying in equities remains strong, but institutional selling and outflows from gold ETFs point to defensive positioning 17. Home Depot ’s Q1 results reflect a still-resilient US consumer, with no immediate tariff-driven inflation in its core categories 14.

Traders should watch for further dollar and Treasury volatility, sector rotation in equities (especially in tech and consumer names exposed to tariffs), and continued institutional moves in crypto. Macro headlines and policy shifts remain key drivers for the session.