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SFM Market Commentary: 5/23/25

In the last two weeks, markets have been shaped by signs of easing inflation, renewed global trade cooperation, and growing concern over government debt levels. At the same time, major deals and regulatory developments across healthcare, tech, and finance are signaling broader shifts in economic power and policy direction. Let’s dive in!

  • Moody’s Downgrades U.S. Debt: Moody’s lowered the U.S. sovereign credit rating from Aaa to Aa1, aligning with S&P and Fitch, amid concerns over rising deficits, interest costs, and lack of fiscal reform. The downgrade highlights long-term fiscal risks and could pressure lawmakers to address growing budget imbalances before they further impact credit conditions.
  • U.S.–Saudi Investment Pact: President Trump announced a landmark $600 billion Saudi commitment to the U.S., spanning defense, energy, AI, and infrastructure. The historic deal aims to deepen economic ties, boost American industry, and support national security through strategic, long-term partnerships.
  • Inflation Slows: April’s consumer inflation cooled to 2.3% year-over-year, its lowest since early 2021, with core CPI rising 2.8%. While tariffs have yet to meaningfully impact prices, economists caution that pressures could return by summer.


  • Producer Prices Cool: U.S. producer prices unexpectedly fell 0.5% in April, led by the steepest drop in services costs since 2009. Easing demand for travel, lodging, and financial services helped pull inflation lower, possibly tempering expectations for future price growth.
  • Foreign Demand for Treasuries: Foreign holdings of U.S. Treasuries hit a record $9.05 trillion in March, marking a third consecutive monthly gain. Despite strong demand early in the year, analysts warn that April’s tariff shock may have cooled investor appetite, especially among Chinese holders whose Treasury exposure has continued to decline.
  • Tariff Pause Announced: The U.S. and China agreed to sharply cut tariffs for 90 days, reducing reciprocal duties from 125% to 10%. Markets rallied on the news, with major indexes and oil prices jumping. While the move marks a major thaw in trade tensions, officials cautioned that a long-term resolution remains uncertain and negotiations will continue.



  • Capital One-Discover Merger: Capital One has finalized its $35B acquisition of Discover, gaining a major payments network and strengthening its competitive position against Visa and Mastercard. The merger is expected to boost earnings, generate significant synergies, and reshape the U.S. credit card industry.
  • UnitedHealth Medicare Probe: The DOJ is reportedly conducting a criminal investigation into UnitedHealth’s Medicare Advantage practices. While the company denies receiving official notice, the probe adds to mounting scrutiny and has triggered a sharp stock drop.
  • Regeneron Buys 23andMe Assets: Regeneron will acquire most of 23andMe’s core business lines for $256 million following a bankruptcy auction, excluding its telehealth unit. The deal aims to preserve 23andMe’s mission while addressing data privacy concerns.


In the next two weeks, markets will closely watch key economic releases, including the PCE inflation report and updated consumer confidence data, both critical for gauging the Fed’s next steps. U.S. markets will be closed Monday for Memorial Day, offering a brief pause amid ongoing geopolitical developments and trade negotiations.

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