Wednesday Afternoon Coffee - Markets Update - 21 May 2025 - Stocks Slide as Bond Yields Surge on Weak Treasury Auction; Gold Rises Amid Middle East Tensions

The Trade Academy Team
May 21
3 min read

Markets Update: U.S. stocks tumbled Wednesday as bond yields surged following weak demand at a 20-year Treasury auction, amplifying investor anxiety over the country’s worsening fiscal outlook. Meanwhile, gold extended its rally amid heightened geopolitical tensions, and oil prices slipped again despite reports of potential military escalation in the Middle East.

Global Markets Roundup: 21 May 2025

Major Indexes Sink on Debt Concerns, Weak Auction

All three major U.S. stock benchmarks posted steep losses as Wednesday’s $16 billion Treasury auction of 20-year bonds met tepid demand, sending yields sharply higher and raising fresh concerns about waning appetite for U.S. debt.

Dow Jones Industrial Average: -817.23 points (-1.91%) to 41,860.01;

S&P 500: -95.91 points (-1.61%) to 5,844.55;

Nasdaq Composite: -270.07 points (-1.41%) to 18,872.64.

The selloff followed mounting anxiety around President Donald Trump’s proposed tax-cut bill, which analysts warn could inflate the federal deficit by as much as $5 trillion. House Speaker Mike Johnson acknowledged the measure faces internal GOP resistance and may not see a full chamber vote this week. Moody’s recent U.S. credit rating downgrade and stalled trade negotiations also weighed on sentiment.

MSCI World Index: -0.90% to 873.69;

STOXX 600 (Europe): -0.04%, led lower by a drop in JD Sports.

Latin American Stocks Sink, Currencies Mixed

Latin American equity markets mirrored global risk-off sentiment. The MSCI regional index fell 1.2%, its worst day in over a month, while the regional currency index rose slightly.

Mexican peso (USDMXN): -0.6%, despite a strong 4.3% March retail sales reading

Colombian peso (USDCOP): -0.4%, tracking oil;

Brazilian real (USDBRL): +0.4%, buoyed by firm iron ore prices;

Mexico’s stock index rose 0.4%, supported by FEMSA and Grupo Mexico, while Brazil’s IBOVESPA dropped 1.6%, dragged by financials and utilities.

Emerging Markets React to U.S. and Local Developments

South Africa’s rand slipped 0.1% after the government projected a wider deficit and rising debt. Still, the SA40 equity index climbed 0.7% to a record, helped by softer-than-expected April inflation at 2.8%. In Israel, long-dated international bonds fell on news of potential strikes on Iranian nuclear sites. 2050 bonds dropped more than 1 cent on the dollar.

Treasuries Slide, Dollar Weakens

The 30-year Treasury yield surged 11.5 basis points to 5.0817%, its highest since late 2024. The soft auction underscored market jitters about long-term U.S. debt sustainability.

The U.S. Dollar Index DXY dropped 0.36% to 99.60, as fiscal concerns and slowing inflation dented confidence in the greenback.

Gold Shines, Oil Slips on Middle East Jitters

Gold extended its rally on geopolitical risk following reports that Israel is preparing a strike on Iranian nuclear facilities. Gold (August futures): +$25.40 to $3,338.00/oz

Oil prices dropped for the second straight session despite escalating tensions, pressured by bearish U.S. inventory data and news of upcoming Iran-U.S. nuclear talks.

WTI Crude (CL1!): -$0.46 to $61.57/barrel; Brent Crude (BRN1!): -$0.53 to $64.85/barrel.

Grains Extend Gains

Weather concerns and crop condition downgrades continued to support U.S. grains.

Wheat (ZW1!): +3¼ cents to $5.49¼/bushel;

Soybeans (ZS1!): +9¾ cents to $10.62¾/bushel;

Corn (ZC1!): +6½ cents to $4.61/bushel.

Outlook

Markets are grappling with multiple headwinds—from fiscal instability and bond market turbulence to unresolved trade disputes and geopolitical flare-ups. With the 90-day tariff pause nearing its end and uncertainty swirling around the U.S. tax bill, investors are bracing for a volatile stretch.

Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team