Unadorned Notes: May 16-22, 2025
Bitcoin Hits Record High; CEOs Court Trump on Mideast Tour; China Leads Renewable Energy Shift; House Passes Sweeping Tax Bill; U.S.-China Tensions Rise Over Chips
Economics, Finance, and Business
U.S. Jobless Claims Remain Stable: Initial jobless claims in the U.S. declined by 2,000 to 227,000 for the week ending May 17, 2025, according to the Labor Department. Unadjusted claims fell by 3,635 to 202,088, continuing a trend of relatively low filings in 2025. Continuing claims, which reflect the number of people receiving unemployment benefits, rose by 36,000 to 1.9 million for the week ending May 10, 2025, indicating slower reemployment. San Francisco Fed President Mary Daly described the labor market as solid but noted job seekers may face longer search times than in recent years. Analysts are watching potential impacts from tariffs and slower hiring, with Deutsche Bank projecting a decline in private payroll growth to 125,000 in May.1
Consumer Sentiment Hits New Low: U.S. consumer sentiment declined sharply in May 2025, with the University of Michigan index falling to 50.8, its lowest reading since June 2022. Inflation expectations surged to 7.3% for the year ahead, the highest since 1981, driven by widespread concern over the economic impact of tariffs. The decline in sentiment was most pronounced among Republicans, as businesses such as Walmart and auto manufacturers warned of impending price hikes. Import prices and housing data reflected further economic strain, with import costs rising and single-family housing starts and permits both falling to multi-month lows. Economists warned that heightened inflation expectations and persistent supply shocks could complicate the Federal Reserve’s monetary policy outlook.2
U.S. Business Activity Rebounds: U.S. business activity expanded in May 2025, with S&P Global’s Composite PMI rising to 52.1, supported by gains in both manufacturing and services. The improvement followed a temporary easing of trade tensions with China, though concerns about future tariff hikes led firms to stockpile inputs, pushing inventories to an 18-year high. Input and output prices surged, with the index for prices paid by businesses reaching 63.4, its highest since November 2022, indicating strong inflationary pressures. Despite the rebound, employment slipped into contraction territory and business sentiment remained subdued due to rising costs and policy uncertainty. Economists warn that stagflation risks persist, as inflation accelerates and GDP growth is projected to slow to under 1% in 2025.3
U.S. Existing Home Sales Decline: U.S. existing home sales fell 0.5% in April 2025 to a seasonally adjusted annual rate of 4.00 million units, marking the slowest April pace since 2009. The decline occurred despite increased inventory and temporarily lower mortgage rates, with elevated borrowing costs and economic uncertainty weighing on demand. Inventory rose 9.0% from March and 20.8% year-over-year, while the median home price reached a record $414,000 for April. Properties spent more time on the market, and first-time buyers remained below the level typically associated with market strength. Analysts noted increased supply has improved buyer leverage, though high rates and affordability constraints continue to limit overall activity.4
U.S. Mortgage Demand Falls Sharply: U.S. mortgage applications declined 5.1% last week as interest rates rose to their highest level since February, according to the Mortgage Bankers Association. The average rate on 30-year fixed mortgages with conforming loan balances increased to 6.92%, up from 6.86% the prior week. Purchase applications fell 5% week-over-week but remained 13% higher than a year ago, while refinance applications dropped 5% but were still 27% above year-ago levels. Rising rates, inflation concerns, and broader economic uncertainty have dampened homebuyer activity during what is typically a strong spring season. Industry analysts note that few homeowners stand to benefit from refinancing due to the current rate environment.5
Moody’s Downgrades U.S. Sovereign Debt: Moody’s downgraded the U.S. sovereign credit rating from Aaa to Aa1, citing rising interest costs and sustained fiscal deficits, making it the last of the three major agencies to remove the top-tier rating. The downgrade sparked concerns about investor demand for U.S. government bonds, driving 10-year Treasury yields above 4.5% and pushing 30-year yields to over 5%, the highest since November 2023. Higher yields have increased borrowing costs and intensified pressure on equities, with valuation concerns emerging due to elevated price-to-earnings ratios. Analysts noted that while forced selling of Treasuries is unlikely, the downgrade may steepen the yield curve and erode sentiment toward long-term U.S. debt. The move coincides with renewed fiscal stimulus efforts and trade de-escalation, complicating the Federal Reserve’s monetary policy outlook.6
Treasury Auction Reveals Weak Demand: The U.S. Treasury’s $16 billion auction of 20-year bonds saw weaker-than-expected demand, with yields rising to 5.127%, the highest since November 2023. Investor concerns over rising deficits and Moody’s recent U.S. credit downgrade contributed to a broader selloff in long-term government bonds and U.S. equities. The auction cleared at a high yield of 5.047%, with a bid-to-cover ratio of 2.46, the lowest since February, despite solid foreign interest. Analysts attributed market volatility to fears over the fiscal impact of President Donald Trump’s proposed tax-and-spending bill, projected to add up to $5.2 trillion to the national debt by 2034. The Treasury is expected to increase long-term debt issuance in 2025, heightening scrutiny of U.S. fiscal sustainability.7
Bitcoin Hits Record High: Bitcoin surged past $110,000 for the first time on Thursday, reaching $111,385 amid increased investor interest and growing political support for digital assets. The rise follows the Senate’s advancement of the GENIUS Act, a regulatory bill backed by the cryptocurrency industry, which aims to formalize rules for stablecoins. Ether and the Trump-associated $TRUMP memecoin also posted gains, reflecting broad optimism across the crypto market. Analysts attribute bitcoin’s rally to both regulatory momentum and investor concerns over rising U.S. deficits and Treasury yields following recent credit downgrades. President Donald Trump, a vocal cryptocurrency advocate, has pledged to expand crypto adoption and establish a federal bitcoin reserve, fueling further market enthusiasm.8
U.S.-China Shipping Rates Surge: Ocean freight bookings from China to the United States surged 275% following a 90-day reduction in tariffs from 145% to 30%, leading to a sharp rise in shipping costs. The World Container Index reported an 8% weekly increase in global shipping rates, with Shanghai–New York and Shanghai–Los Angeles routes rising 19% and 16%, respectively. Industry experts warned that limited shipping capacity and heightened uncertainty are likely to push transportation costs further upward. Retailers and importers, including Walmart and Target, face growing expenses, potentially passing higher prices on to consumers and contributing to inflation. The sudden spike in volumes follows a period of reduced activity earlier in May, when elevated tariffs had briefly suppressed imports.9
Retailers Struggle With Tariff Costs: Major U.S. retailers, including Walmart, Target, Home Depot, and Lowe’s, are adjusting business strategies in response to President Donald Trump’s tariffs, which have added significant pressure on supply chains and margins. While Walmart has warned of imminent price increases, others such as Target and Home Depot are seeking to offset costs through supplier negotiations, sourcing changes, and inventory adjustments. The temporary reduction in tariffs on Chinese imports to 30% has offered limited relief, as all global imports now face a 10% levy. Retailers are navigating public communications carefully to avoid criticism from the White House, which has publicly rebuked companies like Walmart, Mattel, and Amazon over pricing responses. Executives across the sector emphasize efforts to remain price-competitive while managing inflationary pressures from upstream suppliers.10
CEOs Court Trump on Mideast Tour: U.S. business leaders accompanied President Donald Trump on a recent Middle East tour, seeking regulatory relief and favor amid trade tensions and tariff uncertainty. Executives from tech, energy, and finance sectors attended hastily arranged conferences in Saudi Arabia, the UAE, and Qatar, where Trump promoted U.S. business and bilateral deals. Despite their engagement, firms like Amazon, Walmart, and Apple have faced public rebukes from Trump, highlighting the transactional and unpredictable nature of influence in his administration. Meanwhile, the U.S. deepened strategic AI and infrastructure partnerships in the Gulf, securing major agreements on data centers and chip supply to counter China’s tech influence. The initiatives, backed by billions in regional investment, aim to establish the Middle East as a hub for AI development while reinforcing American technological and geopolitical leadership.11
China Leads Renewable Energy Shift: China accounted for nearly two-thirds of global wind and solar capacity additions in 2024, driving over 90% of new electricity generation capacity worldwide, according to IRENA data. While renewable investment is accelerating globally, the surge is overwhelmingly concentrated in China, with Europe and the U.S. contributing modestly by comparison. Despite continued coal expansion, China’s CO₂ emissions plateaued in early 2024, as renewable energy outpaced fossil fuel growth in meeting rising electricity demand. The global energy transition remains uneven, with other regions constrained by stagnant demand, slower investment, and limited grid expansion. China’s rapid deployment underscores both its energy security strategy and its central role in shaping global decarbonization trends.12
U.S. Politics, Policies, and Geopolitics
House Passes Sweeping Tax Bill: The U.S. House of Representatives narrowly passed President Donald Trump’s expansive tax and policy bill, which includes major tax cuts and spending changes projected to add $3.8 trillion to the national debt over the next decade. The legislation extends 2017 income tax reductions, introduces new tax breaks for tips, seniors, and car loans, and makes significant cuts to Medicaid projected to remove 7.6 million people from coverage. Senate Republicans have signaled the bill will face major revisions, particularly regarding deficit concerns and Medicaid provisions. The proposal also rolls back clean energy tax credits enacted under President Biden’s Inflation Reduction Act, drawing opposition from some GOP senators. The bill must pass the Senate before Congress’s summer recess to avoid a potential default, as it includes a $4 trillion debt ceiling increase.
SCOTUS Backs Trump on TPS: The U.S. Supreme Court, in an emergency order, allowed the Trump administration to revoke Temporary Protected Status (TPS) for Venezuelan nationals, reversing a lower court’s injunction. The decision affects approximately 300,000 migrants currently protected from deportation and potentially another 300,000 whose protections are set to expire in September 2025. Only Justice Ketanji Brown Jackson dissented, as the Court offered no explanation for its ruling. A district judge had previously blocked the policy, citing racial animus and procedural violations, while the administration argued that TPS revocations are an unreviewable executive power. The case returns to the lower courts, with the Ninth Circuit yet to issue a final decision and a hearing scheduled for July.13
Judge Blocks Education Department Closure: A federal judge in Massachusetts issued an injunction preventing the Trump administration from dismantling the U.S. Department of Education and ordered the reinstatement of employees terminated since January 20. U.S. District Judge Myong Joun ruled that the administration’s actions lacked congressional authorization and would cause irreparable harm to students, educators, and essential services. The court found no evidence supporting claims that the mass firings improved efficiency, instead concluding that the real aim was to dismantle the department. The order also blocks implementation of President Donald Trump’s directive to transfer student loan and special education functions out of the agency. The Education Department has announced plans to appeal the ruling on an emergency basis.14
SSA Embraces AI, No Layoffs: Social Security Administration (SSA) Commissioner Frank Bisignano stated he has no plans for workforce reductions, emphasizing that artificial intelligence (AI) will enhance productivity and modernize operations. Bisignano aims to make SSA a “digital-first” agency by overhauling its website and deploying AI tools on phone lines and claims processing to reduce delays and improve service. While acknowledging the agency’s lowest staffing in 50 years, he pledged to maintain or increase headcount as needed, stressing that automation will complement—not replace—human roles. Bisignano also addressed internal dissatisfaction, low morale, and public skepticism, asserting that better technology and meaningful work will raise employee engagement. The SSA faces scrutiny amid rising federal deficits, proposed IT upgrades, and recent criticism of DOGE-led system changes, which former officials warn could risk benefit delivery stability.15
Biden Cancer Diagnosis Raises Questions: Former President Joe Biden’s announcement of a Stage 4 prostate cancer diagnosis prompted both sympathy and scrutiny, with critics questioning the timing and transparency of the disclosure. Medical experts noted that the cancer may have been developing for years, raising concerns about missed or undisclosed screenings, especially given presidential health monitoring standards. Former aides and political opponents speculated the announcement may have been intended to divert attention from recent reports highlighting Biden’s cognitive decline during his presidency. The Biden family’s past handling of Beau Biden’s illness, which was kept largely private, has further fueled skepticism about the Biden administration’s openness. A Biden spokesperson confirmed the former president had not been diagnosed with prostate cancer prior to last week and had not undergone PSA testing since 2014.16
U.S.-China Tensions Rise Over Chips: The United States has warned that the use of Huawei’s Ascend AI chips may violate export controls, escalating concerns over Chinese semiconductor advances. The move comes amid broader efforts by Washington to curb China’s access to advanced technology, despite a recent easing of tariffs under a fragile trade agreement. China responded by accusing the U.S. of undermining bilateral commitments and threatened legal action against entities enforcing American measures. Malaysia faced scrutiny after a government minister referenced plans to deploy Huawei chips, a claim later retracted amid U.S. criticism. Industry leaders, including Nvidia, have criticized U.S. export controls as counterproductive, arguing they accelerate China’s push for tech self-sufficiency and erode U.S. market dominance.17
Trump Unveils Golden Dome Shield: President Donald Trump announced the launch of the $175 billion Golden Dome missile defense program, a space-based system intended to intercept threats from China and Russia using a network of surveillance and interceptor satellites. U.S. Space Force General Michael Guetlein will lead the effort, with Canada expressing interest in participating through NORAD-related cooperation. The system draws inspiration from Israel’s Iron Dome and involves contractors such as SpaceX, Palantir, Anduril, L3Harris, Lockheed Martin, and RTX. Lawmakers have proposed an initial $25 billion allocation as part of a larger $150 billion defense package, though funding remains uncertain due to legislative hurdles. Industry experts are skeptical of the program’s timeline and total cost, with CBO estimates projecting expenses could reach $831 billion over two decades.18
Trump Urges Russia-Ukraine Talks, Not Ceasefire: President Donald Trump held a call with Ukrainian President Volodymyr Zelensky and five European leaders following a conversation with Russian President Vladimir Putin, during which Trump reported that Putin agreed to begin direct negotiations but declined to endorse a ceasefire. European leaders, including those from Germany, France, and Italy, expressed surprise at Trump’s reluctance to push for immediate sanctions or insist on a ceasefire as a condition for talks. Trump emphasized the conflict should remain a European matter and stated the U.S. would not participate in negotiations, though he proposed the Vatican as a potential venue. Zelensky and others highlighted that previous ceasefire discussions had already taken place and criticized Trump for not applying pressure on Putin. The White House later defended Trump’s approach, citing Putin’s willingness to submit a written peace proposal as a positive development.19
