Olympus has fallen?

Daily update

A credit rating agency (it does not matter which) downgraded the US from something to something else. US President Trump’s current policies are unlikely to place the US on a sustainable debt path. Influential donor Musk’s DOGE efforts are unlikely to reduce the deficit. Market reactions should be muted—there is little new information. Administration officials attempted to frame the decision in a political context, but some comments also suggested a limited understanding of the ratings process.
China’s April economic data showed weaker retail sales but stronger-than-expected industrial production. There were slowing sales of consumer goods and autos, which is concerning. Trump’s latest tariff retreat might be used by US importers as an opportunity to buy early for Christmas. This could support China’s production data.
Portuguese Prime Minister Montenegro won the most seats in the weekend’s election, but the far-right Chega party saw a big increase in support. Periods of structural economic upheaval make people fearful of the future. That tends to encourage scapegoat economics and prejudice politics (economically damaging trends).
There are no fewer than six Federal Reserve speakers scheduled today. Investors will give special attention to comments on fiscal policy, in the wake of the downgrade, and on the growth and inflation impact of tariffs.