June 2, 2025
(THE BOND MARKET COULD BE IN FOR A BRUISING)
June 2, 2025
Hello everyone
WEEK AHEAD CALENDAR
MONDAY, JUNE 2
9:45 a.m. S&P PMI Manufacturing final (May)
10:00 a.m. Construction Spending (May)
10:00 a.m. ISM Manufacturing (April)
Earnings: The Campbell’s Co
TUESDAY, JUNE 3
5:00 a.m. Euro Area Inflation Rate
Previous: 2.2%
Forecast: 2.1%
10:00 a.m. Durable Orders final (April)
10:00 a.m. Factory Orders (April)
10:00 a.m. JOLTS Job Openings (May)
Earnings: Hewlett Packard Enterprise, CrowdStrike Holdings, Dollar General
WEDNESDAY, JUNE 4
9:45 a.m. Canada Rate Decision
Previous: 2.75%
Forecast: 2.75%
9:45 a.m. PMI Composite final (May)
9:45 a.m. S&P PMI Services final (May)
10:00 a.m. ISM Services PMI (May)
2:00 p.m. Fed Beige Book
Earnings: Dollar Tree
THURSDAY, JUNE 5
Euro Area Rate Decision
Previous: 2.25%
Forecast: 2.00%
8:30 a.m. Continuing Jobless Claims (05/24)
8:30 a.m. Initial Claims (05/31)
8:30 a.m. Unit Labor Costs final (Q1)
8:30 a.m. Productivity final (Q1)
8:30 a.m. Trade Balance (April)
Earnings: Broadcom, Brown-Forman, Fastenal
FRIDAY, JUNE 6
8:30 a.m. Hourly Earnings preliminary (May)
8:30 a.m. Average Workweek preliminary (May)
8:30 a.m. Manufacturing Payrolls (May)
8:30 a.m. Nonfarm Payrolls (May)
Previous: 177k
Forecast: 130k
8:30 a.m. Participation Rate (May)
8:30 a.m. Private Nonfarm Payrolls (May)
8:30 a.m. Unemployment Rate (May)
3:00 p.m. Consumer Credit (April)
THE BOND MARKET IS YELLING – “We have lost trust.”
Jamie Dimon has stated that the bond market is an accident waiting to happen. Cracks are starting to become blindingly obvious as we see that excessive government spending and continued quantitative easing have pushed the system toward instability.
Moody’s recently downgraded the US credit rating from Aaa to Aa1, joining S&P and Fitch in lowering the country’s rating below the top tier. The downgrade was driven by concerns over the $36 trillion US debt, persistent large deficits, and rising interest costs, which are now “significantly higher than those of similarly rated countries.” The US debt-to-GDP ratio stands at about 123% in 2025, ranking it eighth globally, higher than most advanced economies except Japan (with a much higher ratio), but above China (96%) and India (80%).
The Congressional Budget Office (CBO) and other analysts forecast that US debt will continue to rise, reaching 156% by 2055 under current policies.
Interest payments on the national debt are projected to nearly double over the next decade, reaching $1.8 trillion by 2035 and crowding out other government spending. The sustainability of high debt is increasingly in question: as debt grows and interest rates remain elevated, the US will devote a larger share of its budget to debt service, reducing fiscal flexibility and raising the risk of a fiscal crisis.
Risks to think about: persistent deficits, higher inflation expectations, and geopolitical uncertainty – these could keep yields elevated and push them higher, especially if investor confidence in US fiscal management erodes.
Something not to brag about is the US debt-to-GDP ratio – it is amongst the highest in the world, at 123%, with projections for further increases – surpassed only by a few countries like Japan.
Compared to other developed markets, US borrowing costs are rising faster due to its unique combination of high debt and large, persistent deficits.
The butterfly is flapping its wings in the Amazon rainforest, and Jamie Dimon is echoing the warning – US fiscal policy must shift, or the bond market might just suffer a serious fracture.
Video to watch
Jamie Dimon warns US bond market will ‘crack’ under pressure
MARKET UPDATE
S&P500
The movement in the index has been choppy and “noisy” and may continue like this for a while. There is still a possibility we could see more upside in the index above the Feb. peak. (Important to note that the news flow could treat the index like a punching bag – hence my term of zig zagging, or think of it like a ship going through stormy seas. Difficult to get your footing & gain traction).
Resistance: 5930/45 area, and 5960/80 area
Support: 5770/85, $5705
GOLD
We are still in a period of ranging since gold reached that high of 3500. This price action is part of a longer-term topping move. We could see more of this ranging, which will slow momentum, before gold turns over completely. This will be a medium-term quiet period in gold. The long-term view is still bullish. (Note: we need to see a close below $3000 before this medium-term move in gold can be seen as finished).
Resistance: recent high ~ $3357/70, and ~ $3445
Support: $3245 area, and $3165 area. Close below this area and, in particular, below $3000 would accelerate a downside move.
BITCOIN
Bitcoin reached a top of 112k in May and has since rolled over. A sell signal is showing on the MACD, and we are likely to see more ranging for a period before a larger downside is seen. This would be seen as a short-to-medium-term retracement, which could last a few weeks to a month. Following this retracement, we should see another rally in Bitcoin.
Resistance: 106/107k and 112/113 area.
Support: 103/104k, and then 100k area, 97k, and possibly 95/90 area.
HISTORY CORNER
On June 2
QI CORNER
Mark Pearson (Tech Investor, Venture Capital, Unicorn Hunter…)
Do you think the U.K. is the only country with “brain drain” going on?
(Science Pulse)
SOMETHING TO THINK ABOUT
HOUSEKEEPING
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Thank-you.
And thank you to all those who attended the Sunday morning, June 1, Jacquie’s Post May zoom monthly meeting. Everyone participated in a lively and interesting discussion after the presentation. Thank-you.
The recording will be sent out this week.
I am speaking at The Summit this week. I believe my slot will be on Wednesday. Will let you know the time as soon as I know.
My focus will be on Gold.
Cheers
Jacquie
