Treasuries Extend May Slump as Tariff Concerns Cloud Outlook

Bond

Forex

Summary:

The spread between five- and 30-year yields climbed to within a whisker of 100 basis points, a level it last closed above in 2021. A gauge of the dollar approached its lowest level since 2023.

Treasuries began June on the back foot with 30-year bond yields testing the 5% level as concerns over President Donald Trump’s tariff policies resurfaced at the start of a data-heavy week for assessing the health of the world’s largest economy.

Benchmark yields were trading four to seven basis points higher across the curve and yields resumed climbing after a brief pullback in response to weaker-than-expected US ISM manufacturing data for May that was accompanied by higher prices paid. The ISM remains in contraction territory below 50.

Following their first monthly decline of 2025 in May as measured by a Bloomberg index, US Treasuries — particularly longer-dated maturities — continue to face pressure amid persistent concerns over the nation’s fiscal outlook.

Longer-dated bonds led Monday’s declines, driving yields on 10-year debt up more than 6 basis points to a session high near 4.47%, while the 30-year bond briefly poked above 5%. The spread between five- and 30-year yields climbed to within a whisker of 100 basis points, a level it last closed above in 2021. A gauge of the dollar approached its lowest level since 2023.

“There is a general view that the curve should steepen” ahead of US employment data due Friday that is followed by sales of 10- and 30-year Treasuries next week, said Tom di Galoma, managing director at Mischler Financial Group.

Even with the long-end back near 5% and around former cycle peaks of 2007, large bond investors generally remain underweight and favor owning shorter-dated areas of the market around the five-year sector.

“Our strongest conviction has been staying underweight long-term US Treasuries,” BlackRock Investment Institute said in its latest weekly note. Amid persistent deficits and sticky inflation, the asset manager is watching to see whether Congress passes a budget bill that could push the US deficit higher, and “impact foreign investors and drive term premium even higher.”

The weakness in longer-dated bonds saw the 20-year yield briefly drop below that of the 30-year, the most in almost four years. Since Treasury revived 20-year bond sales, nearly five years ago, the benchmark has been unpopular among investors and traded at a discount with its yield above the 30-year.

“We can certainly see why the long end of safe haven curves are unloved,” said Rabobank strategists including Richard McGuire, adding the US policy outlook is too cloudy to attract buyers for long-dated Treasuries.

That reflects the risk of further trade salvos from the US president, after Trump announced he would be increasing tariffs on steel and aluminum to 50% from 25% to help protect American workers. He also said China had violated its trade agreement with the US.

What Bloomberg strategists say...

“A buyers’ strike in bonds coupled with Monday’s inflation outlook means investors’ steepeners, a heavily subscribed trade since mid-April, has staying power.” — Alyce Andres, MLIV Rates Strategist, Chicago

A slate of labor market reports due this week could play a key role in shaping the next moves in Treasury yields and the Federal Reserve’s interest rate path. Traders now anticipate two quarter-point rate cuts in 2025, down from expectations of three earlier in May.

One of the Fed officials speaking on Monday, US Chair Jerome Powell didn’t comment on the outlook for interest rates. Elsewhere, Chicago Fed President Austan Goolsbee said the central bank can proceed with interest-rate cuts if uncertainty around trade policy is resolved.

Speaking earlier, Dallas Fed President Lorie Logan said the US central bank can remain patient as it assesses risks to both inflation and unemployment.

Source: Bloomberg

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Manuel

Economic

Political

The European Commission said on Monday it would make a strong case this week for the United States to reduce or eliminate tariffs even after Donald Trump said he would double import duties on steel and aluminium to 50%.

European Trade Commissioner Maros Sefcovic will meet U.S. Trade Representative Jamieson Greer at an OECD gathering in Paris on Wednesday, while Commission technical teams will be in discussions with counterparts in Washington this week.

White House press secretary Karoline Leavitt told reporters that the EU was "negotiating in good faith" with U.S. officials and the Trump administration remained "hopeful and optimistic" that a deal could be struck with Brussels.

The Commission, which oversees trade policy for the 27-nation European Union, said it was prioritising negotiations to resolve the conflict.

"We don't want to go down the route of tariffs. Rather than have them increase, we want them to decrease and where possible eliminate them," a Commission spokesperson told a press conference on Monday.

"That remains the case, that remains our priority. We will be making that case strongly both at technical level and at political level this week."

The EU has said it strongly regrets the planned doubling of steel tariffs.

The decision "adds further economic uncertainty on both sides of the Atlantic," Olof Gill, the European Commission's spokesperson for trade, said on X, adding that both sides had agreed to accelerate their negotiations.

EU officials had no immediate comment on news that the Trump administration was asking trading partners to present their best offers on trade by Wednesday, news first reported by Reuters.

The EU currently faces 25% tariffs on steel and cars and for Trump and "reciprocal" tariffs on most EU goods, which were provisionally set at 20% for the EU but is being held at 10% during a 90-day pause until July.

The EU imposed, but immediately suspended, a first set of counter tariffs on 21 billion euros ($24 billion) of annual U.S. imports package in response to U.S. metals duties.

It is also weighing a response to the U.S. car and broader tariffs that would hit up to 95 billion euros of U.S. imports.

The Commission said that, in the absence of a mutually acceptable solution, these countermeasures would take effect automatically on July 14, or earlier if circumstances require.

Source: Reuters

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Manuel

Cryptocurrency

JPMorgan Chase reported an improvement in Bitcoin mining profitability in May, with 13 tracked companies seeing significant financial gains.

The increase in market value underscores broader implications for the cryptocurrency sector, potentially affecting investment and operational strategies.

May Sees 19% Growth in Miner Market Value

In May 2025, JPMorgan Chase analysts observed a rise in Bitcoin mining profitability. The market value of 13 U.S.-listed mining companies increased by about 19% from April, accompanied by a 36% rise in average daily gross profit. JPMorgan's report highlighted Bitdeer's market value rise of 43%, while Greenidge encountered a 5% decline. Bitcoin mining spaces noted a noteworthy change as network hashrate grew by 2% to an average of 885 EH/s in early May. Analysts highlighted a 13% rise in "hashprice," indicating improved miner revenue.

The mining profitability report drew no direct executive comments from JPMorgan leadership, including CEO Jamie Dimon. Reginald Smith and Charles Pearce provided the analysis, noting a 13% increase in daily profitability during the first half of May. Market dynamics reflected these changes, though major statements from government or leading industry figures remain absent.

"We estimate miners earned approximately $100 daily block revenue per/s during the first two weeks of the month, marking a 13% increase from the previous month and a 3% rise year-over-year." — Reginald Smith, Analyst, JPMorgan Chase

Bitcoin Price and Miner Revenue Trends in Focus

Did you know? Bitcoin mining profitability historically climbs with price increases or reduced network difficulty, often aligning with BTC's spot price trends.

Bitcoin's current price stands at $104,433.72, with a market cap of $2.08 trillion and market dominance of 63.48%, according to CoinMarketCap. Over 60 days, Bitcoin's price increased by 27.46%, despite a 0.55% dip in the past 24 hours. Trading volume reached $43.73 billion, reflecting a 20.96% change.

The Coincu research team indicates potential economic and technological advancements as profitability improves. Increases in miner revenue may enhance network resilience, attracting further investment and innovation. No significant regulatory or technological shifts directly link to this profitability surge.

Source: Coincu

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Manuel

Political

Commodity

Russia told Ukraine at peace talks on Monday that it would only agree to end the war if Kyiv gives up big new chunks of territory and accepts limits on the size of its army, according to a memorandum reported by Russian media.

The terms, formally presented at negotiations in Istanbul, highlighted Moscow's refusal to compromise on its longstanding war goals despite calls by U.S. President Donald Trump to end the "bloodbath" in Ukraine.

Ukraine has repeatedly rejected the Russian conditions as tantamount to surrender.

Delegations from the warring sides met for barely an hour, for only the second such round of negotiations since March 2022. They agreed to exchange more prisoners of war - focusing on the youngest and most severely wounded - and return the bodies of 12,000 dead soldiers.

Turkish President Tayyip Erdogan described it as a great meeting and said he hoped to bring together Russia's Vladimir Putin and Ukraine's Volodymyr Zelenskiy for a meeting in Turkey with Trump.

But there was no breakthrough on a proposed ceasefire that Ukraine, its European allies and Washington have all urged Russia to accept.

Moscow says it seeks a long-term settlement, not a pause in the war; Kyiv says Putin is not interested in peace. Trump has said the United States is ready to walk away from its mediation efforts unless the two sides demonstrate progress towards a deal.

Ukrainian Defence Minister Rustem Umerov, who headed Kyiv's delegation, said Kyiv - which has drawn up its own peace roadmap - would review the Russian document, on which he offered no immediate comment.

Ukraine has proposed holding more talks before the end of June, but believes only a meeting between Zelenskiy and Putin can resolve the many issues of contention, Umerov said.

Zelenskiy said Ukraine presented a list of 400 children it says have been abducted to Russia, but that the Russian delegation agreed to work on returning only 10 of them. Russia says the children were moved from war zones to protect them.

RUSSIAN DEMANDS

The Russian memorandum, which was published by the Interfax news agency, said a settlement of the war would require international recognition of Crimea - a peninsula annexed by Russia in 2014 - and four other regions of Ukraine that Moscow has claimed as its own territory. Ukraine would have to withdraw its forces from all of them.

It restated Moscow's demands that Ukraine become a neutral country - ruling out membership of NATO - and that it protect the rights of Russian speakers, make Russian an official language and enact a legal ban on glorification of Nazism. Ukraine rejects the Nazi charge as absurd and denies discriminating against Russian speakers.

Russia also formalised its terms for any ceasefire en route to a peace settlement, presenting two options that both appeared to be non-starters for Ukraine.

Option one, according to the text, was for Ukraine to start a full military withdrawal from the Luhansk, Donetsk, Zaporizhzhia and Kherson regions. Of those, Russia fully controls the first but holds only about 70% of the rest.

Option two was a package that would require Ukraine to cease military redeployments and accept a halt to foreign provision of military aid, satellite communications and intelligence. Kyiv would also have to lift martial law and hold presidential and parliamentary elections within 100 days.

Russian delegation head Vladimir Medinsky said Moscow had also suggested a "specific ceasefire of two to three days in certain sections of the front" so that the bodies of dead soldiers could be collected.

According to a proposed roadmap drawn up by Ukraine, a copy of which was seen by Reuters, Kyiv wants no restrictions on its military strength after any peace deal, no international recognition of Russian sovereignty over parts of Ukraine taken by Moscow's forces, and reparations.

UKRAINE TARGETS RUSSIAN BOMBER FLEET

The conflict has been heating up, with Russia launching its biggest drone attacks of the war and advancing on the battlefield in May at its fastest rate in six months.

On Sunday, Ukraine said it launched 117 drones in an operation codenamed "Spider's Web" to attack Russian nuclear-capable long-range bomber planes at airfields in Siberia and the far north of the country.

Satellite imagery suggested the attacks had caused substantial damage, although the two sides gave conflicting accounts of the extent of it.

Western military analysts described the strikes, thousands of miles from the front lines, as one of the most audacious Ukrainian operations of the war.

Russia's strategic bomber fleet forms part of the "triad" of forces - along with missiles launched from the ground or from submarines - that make up the country's nuclear arsenal, the biggest in the world. Faced with repeated warnings from Putin of Russia's nuclear might, the U.S. and its allies have been wary throughout the Ukraine conflict of the risk that it could spiral into World War Three.

A current U.S. administration official said Trump and the White House were not notified before the attack. A former administration official said Ukraine, for operational security reasons, regularly does not disclose to Washington its plans for such actions.

A UK government official said the British government also was not told ahead of time.

Zelenskiy said the operation, which involved drones concealed inside wooden sheds, had helped to restore partners' confidence that Ukraine is able to continue waging the war.

"Ukraine says that we are not going to surrender and are not going to give in to any ultimatums," he told an online news briefing.

"But we do not want to fight, we do not want to demonstrate our strength - we demonstrate it because the enemy does not want to stop."

Source: Reuters

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Kevin Du

Economic

U.S. manufacturing contracted for a third straight month in May and suppliers took longer to deliver inputs amid tariffs, potentially signaling looming shortages of some goods.

The Institute for Supply Management (ISM) said on Monday that its manufacturing PMI edged down to a six-month low of 48.5 last month from 48.7 in April. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy.The PMI, however, remains above the 42.3 level that the ISM says over time indicates an expansion of the overall economy.

Economists polled by Reuters had forecast the PMI rising to 49.3. The survey suggested manufacturing, which is heavily reliant on imported raw materials, had not benefited from the de-escalation in trade tensions between President Donald Trump's administration and China.

Economists say the on-gain, off-again manner in which the import duties are being implemented is making it difficult for businesses to plan ahead. Another layer of uncertainty was added by a U.S. trade court last week blocking most of Trump's tariffs from going into effect, ruling that the president overstepped his authority. But the tariffs were temporarily reinstated by a federal appeals court on Thursday.

The ISM survey's supplier deliveries index increased to 56.1 from 55.2 in April. A reading above 50 indicates slower deliveries. A lengthening in suppliers' delivery times is normally associated with a strong economy. But in this case slower supplier deliveries likely indicated bottlenecks in supply chains related to tariffs.

In April, the ISM noted delays in clearing goods through ports. Port operators have reported a decline in cargo volumes.

The ISM's imports measure dropped to 39.9 from 47.1 in April. Production at factories remained subdued, while new orders barely saw an improvement.

The ISM survey's forward-looking new orders sub-index inched up to 47.6 from 47.2 in April. Its measure of prices paid by manufacturers for inputs eased to a still-high 69.4 from 69.8 in April, reflecting strained supply chains.

Factories continued to shed jobs. The survey's measure of manufacturing employment nudged up to 46.8 from 46.5 in April. The ISM previously noted that companies were opting for layoffs rather than attrition to reduce headcount.

Source: Kitco

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Adam

Stocks

Economic

Hedge funds bought global equities last week at the quickest pace since November 2024, Goldman Sachs said in a note, just as stock markets ended the month with their most positive May performance in decades.

The S&P 500 advanced just over 6% in May, its biggest monthly rise since November 2023 and its best gains for the month of May since 1990. The Nasdaq rallied about 9.6%, which was also its biggest monthly gain since November 2023 and its best May performance since 1997.

Hedge funds ended the week bullish in every global region, led by North America and Europe, the Goldman Sachs report said.

Technology companies attracted the highest interest, with hedge funds accumulating the largest weekly number of net long positions in the sector in over five years. Buying centered on firms integral to the artificial intelligence industry, including semiconductor manufacturers, technology hardware producers and electrical equipment companies, the report said.

North American tech companies were favoured by hedge fund trades, followed by European counterparts, Goldman Sachs said.

The pan European stock index returned more than 5% in May. Hedge funds bought European stocks for the third straight week and at the fastest pace in three months, the Goldman note said.

Companies in Spain, France, Finland, Germany, Sweden and Denmark were the most net bought markets this week, while Ireland, the Netherlands and Switzerland were the most net sold, said the Goldman report.

European stock sectors bought by global hedge funds last week included consumer discretionary, financial, health care and communications companies, the data showed.

Hedge funds mostly bought single stocks but also made some long trades in stock indexes too, said Goldman Sachs.

A long position expects an asset price to rise.

Source: Reuters

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Adam

Cryptocurrency

Bitcoin held its ground above $104,000 on Monday despite the U.S.-China trade tension and court-driven tariff drama that rattled global markets.

Last Friday, U.S. President Donald Trump accused China of violating a mid-May agreement to pause tariff escalation and announced a hike in import tariffs on steel and aluminum, from 25% to 50%, effective June 4.

The pause gave rise to a “Trump always chickens out” meme and its acronym TACO. The president has seemed eager to prove his critics wrong.

During a campaign rally at a U.S. Steel plant in West Mifflin, Pennsylvania, Trump said the tariff hike will “even further secure the steel industry in the United States,” while touting a deal between Nippon Steel and U.S. Steel as a win for American workers.

The geopolitical whiplash triggered nearly $1 billion in crypto liquidations, according to QCP Capital’s Monday update.

BlackRock’s iShares Bitcoin Trust ETF, fresh off a record 34-day inflow streak, saw $430 million in outflows on May 30, as per Farside Investors data.

Yet BTC remained composed, signaling a reset in leverage rather than investor panic.

At the moment, Bitcoin is trading at $104,158, a slight increase of 0.1% over the past 24 hours, as per CoinGecko data.

“Risk reversals have begun to normalize… [and] perp funding has turned flat,” the QCP wrote, suggesting muted short-term price swings.

Institutional interest has not waned eithe.; Japan’s Metaplanet added another $114 million in BTC post-selloff, bringing holdings to 8,888 BTC, worth over $925 million.

QCP referenced the TACO acronym, which has become popular among Trump’s critics, but noted that Friday’s escalation indicated he may be aiming to defy that perception.

With no major policy catalysts before July 8, BTC may stay rangebound between $100K and $110K, QCP noted, citing high open interest at those levels.

Arthur Azizov, founder and investor at B2 Ventures, told Decrypt that the tariff headlines were contributing to market churn, but not a structural shift.

Azizov called the tariff “likely to trigger some market volatility, particularly in risk assets like crypto,” but added, “that doesn’t necessarily mean we’ll see a sharp immediate drop in Bitcoin or other digital currencies.”

“Over time, we've already seen multiple headlines about tariffs, their delays, reversals, and policy shifts — all of that has caused some market swings, but for long-term investors, it hasn’t made a huge difference in the big picture,” the expert said.

China Responds to Trump Claims

On Monday, the Chinese Embassy in Washington posted a statement from China’s Ministry of Commerce on X, calling Trump’s claims “groundless” and warning of “forceful measures” in response.

The ministry said China had upheld the Geneva deal, while the U.S. imposed “discriminatory” actions including AI chip bans, visa revocations, and software restrictions.

China is the world’s largest steel exporter, but sends little to the U.S. due to a 25% tariff imposed in 2018. It ranks third in aluminum supply, making the new 50% tariff a direct blow to the nation.

A federal appeals court temporarily reinstated Trump-era tariffs on May 29, pausing a trade court ruling that had blocked them as unconstitutional.

On Sunday, Trump claimed on Truth Social that if judges were to rule against his tariff powers, it “would allow other Countries to hold our Nation hostage with their anti-American Tariffs.”