10 Things You Need to Know: May 20, 2025

Key data releases this week include: leading economic indicators (Mon), existing home sales (Thu), and new home sales (Fri).

Haver

May 13, 2025

The Consumer Price Index rose 0.2% in April (2.3% y/y) after easing 0.1% in March. A 0.3% rise was expected in the Action Economics Forecast Survey. The CPI excluding food & energy rose 0.2% (2.8% y/y) in April. A 0.3% rise had been expected.

Haver

May 15, 2025

Total retail sales edged up 0.1% (5.2% y/y) after rising 1.7% in March. Expectations had been for no change in sales in the Action Economics Forecast Survey. Sales in the retail control group eased 0.2% (+4.9% y/y) in April.

Haver

May 15, 2025

The Producer Price Index for final demand unexpectedly fell 0.5% m/m (+2.4% y/y) in April following an unchanged reading in March. The Action Economic Forecast Survey had expected a 0.1% m/m increase. The PPI excluding food and energy fell 0.4% m/m (+3.1% y/y) in April. A 0.3% increase was expected.

Barron’s

May 19, 2025

The Joint Committee on Taxation estimated that the bill, including the renewal of the Tax Cut and Jobs Act of 2017, would increase deficits by $3.8 trillion through 2034, equal to 1.1% of gross domestic product. If the BBB were extended permanently, the Bipartisan Policy Center estimated that the deficit would be $5.3 trillion higher, or 1.5% of GDP, even including some $2 trillion in spending cuts through 2034.

Barron’s

May 19, 2025

Even after the administration backed down from 145% levies on China to a mere 10% or 30% in some cases, Goldman Sachs economists estimate that the U.S. economy faces an increase of some 13 percentage points in the levy on imports, the highest burden since the 1930s during the infamous Smoot-Hawley tariffs. Moreover, Goldman estimates that real—that is, after inflation—incomes in the U.S. will be reduced by 1.5%-2% per annum by the tariff regime.

Barron’s

May 19, 2025

A 4.75% 10-year Treasury yield is the average for the U.S. since the dawn of the Republic in 1790, according to Bank of America’s calculations. Today’s supposedly high yields merely represent a return to normalcy.

Bloomberg

May 19, 2025

Two Federal Reserve officials, including New York Fed chief John Williams, suggested policymakers may not be ready to lower interest rates before September as they confront a murky economic outlook. “It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said. Atlanta Fed President Raphael Bostic struck a similar tone on Monday, signaling an unwillingness to move rates for some time. He sees one interest-rate cut in 2025.

Financial Times, Forbes

May 19, 2025

Moody’s has downgraded the US credit rating from Aaa to Aa1 because of a growing budget deficit, prompting a rise in longer-dated Treasury yields to 5% and a decline in S&P 500 futures. The downgrade has highlighted concerns about US fiscal policies, with Moody’s expecting federal deficits to reach nearly 9% of gross domestic product by 2035.

Reuters

May 16, 2025

Foreign holdings of US Treasurys hit a record $9.05 trillion in March, driven by strong demand for US government debt. Japan remains the largest holder, while the UK has surpassed China as the second-largest holder.