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On Wednesday (May 28), the results of the highly anticipated 40-year Japanese government bond auction reflected weak market demand, leading to a rebound in yields for both U.S. and Japanese long-term bonds. However, the MOVE index fell further, hitting a two-month low, suggesting that investor concerns about a sell-off in the bond market have eased amid progress on U.S.-European tariffs. Nvidia's Q1 FY2025 results exceeded expectations, with after-hours stock prices rising by 4.3%.
European and American stock markets generally declined, with the Dow down 0.58%; the S&amp;P 500 down 0.56%; the Nasdaq down 0.51%; and the China Golden Dragon Index down 0.71%. Stocks in the UK, France, and Germany fell by 0.59%, 0.49%, and 0.78%, respectively. Most large tech stocks closed lower, with Tesla down 1.65%, Microsoft down 0.72%, Amazon down 0.63%, Nvidia down 0.51%, Apple up 0.1%, and Meta up 0.23%.
The U.S. dollar index rose by 0.32%, approaching the 100 mark, recording two consecutive days of gains. The USD/JPY rose by 0.36%, marking three consecutive days of increases, while the EUR/USD fell by 0.32%, facing resistance at 1.1300. Gold dropped by 0.43%, falling below the 3300 mark; WTI crude oil rose by 1.29%, with bulls and bears contesting at 62.0; Bitcoin fell by 2%, dropping below 108000.
Macro News
U.S. Federal Court Rules Trump's Tariffs &#34;Illegal&#34;
A significant ruling by a U.S. federal court determined that President Trump lacked the authority to impose large-scale tariffs on global goods under the International Emergency Economic Powers Act (IEEPA) of 1977. The Trump administration is now appealing this ruling in federal court.
The court issued a summary judgment in two separate cases, clearly stating that the IEEPA does not grant the U.S. president &#34;unrestricted tariff powers,&#34; thus rejecting all trade orders issued under this law and imposing a permanent injunction against them. This is the first time the law has been used in a taxation context since its enactment, but it has been explicitly denied by the court.
Following the announcement, the U.S. dollar index broke through the 100 mark, with USD/JPY rising by 0.68% to 146.0, reaching a two-week high; gold fell nearly 1% to 3250 USD; and the Nasdaq 100 index rose by 1.07% to 21731 points.
Federal Reserve Meeting Minutes: Facing Difficult Trade-offs on Employment and Inflation Targets
The minutes from the last Federal Reserve meeting revealed that attending officials believe the uncertainty surrounding the economic outlook is exceptionally high, and a recession may be inevitable. During periods of uncertainty, it is appropriate to maintain cautious policy actions, and the Federal Reserve is prepared to wait for the outlook to become clearer.
The Federal Reserve noted that the tariffs initiated by Trump are larger and more extensive than previously anticipated by the Federal Open Market Committee (FOMC). Officials are concerned that they may face difficult trade-offs in the coming months, as both inflation and unemployment rates are rising, while increasing economic uncertainty proves that cautious monetary policy is appropriate
Officials also pointed out that the volatility in the U.S. bond market in the weeks leading up to the meeting is worth noting, and mentioned that changes in the dollar's safe-haven status, as well as the rise in U.S. Treasury yields, could have long-term effects on the economy.
Japan's 40-year government bond auction results reveal weak market demand
On Wednesday (May 28), the highly anticipated results of Japan's 40-year government bond auction were released. The Japanese Ministry of Finance auctioned approximately 500 billion yen of 40-year government bonds, with a subscription ratio of 2.2 times, marking the lowest demand since July of last year; this is down from the 2.9 times seen in the March auction and below the historical average of 3 times, reflecting weak market demand. The yield surpassing the psychological threshold of 3% attracted some long-term investors' allocation needs, temporarily avoiding severe market turbulence.
After the results of the 40-year Japanese bond auction were announced, U.S. and Japanese bond yields rebounded, with the 10-year U.S. Treasury yield rising 3 basis points to 4.475%, ending a three-day decline; the 10-year Japanese bond yield increased 4 basis points to 1.518%. However, the MOVE index fell further, reaching a two-month low, suggesting that investor concerns about bond market sell-offs have eased amid progress on U.S.-European tariffs.
OPEC+ to meet on May 31 to discuss July production increase, Chevron suspends operations in Venezuela
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed on Wednesday to maintain official production levels unchanged, with market focus shifting to a group of eight countries within the alliance. OPEC+ will hold a separate meeting on May 31 to discuss increasing oil production in July, following previous voluntary production cuts. Whether to continue the aggressive increase of 411,000 barrels per day will be determined by these eight core member countries in a video conference on Saturday.
Goldman Sachs estimates that the eight OPEC+ member countries will decide to restore the daily increase of 411,000 barrels, the same as in the previous two months. The firm's analysis team believes that as long as OPEC+ perceives that some member countries are not adhering to the production agreement, they will continue to increase production to serve as a deterrent.
Additionally, Chevron has decided to suspend its oil operations in Venezuela due to restrictions from the U.S. government, meaning that local crude oil exports will be halted. This news is favorable for oil prices.
U.S. reportedly bans exports of semiconductor design software to China
The Financial Times reported, citing sources, that the Trump administration will require some local companies to stop exporting software related to semiconductor design technology to China. According to the report, the ban will be issued by the U.S. Department of Commerce's Bureau of Industry and Security. The affected companies are mainly large firms with Electronic Design Automation (EDA) technology, including Cadence, Synopsys, and Siemens EDA. These three companies together account for about 80% of the EDA market in China. It is currently unclear whether other EDA technology companies have received the same ban.
The report quoted a U.S. official stating that at least one affected company has received the directive and is assessing the matter
In addition, U.S. Vice President JD Vance stated that after Trump took office, he was committed to promoting the development of Bitcoin. In March, he signed an executive order to establish a strategic reserve for Bitcoin. He also mentioned that China does not like Bitcoin and began banning Bitcoin trading and mining activities in 2021, giving the U.S. government even more reason to promote Bitcoin development.
The Reserve Bank of New Zealand cut interest rates by 25 basis points.
After the monetary policy meeting, the Reserve Bank of New Zealand announced a 25 basis point cut to 3.25%, in line with market expectations. The statement indicated that core inflation is declining, and there is excess production capacity in the economy, which aligns with the conditions for inflation to return to the midpoint target range of 1% to 3% in the medium term. The local economy is also recovering, with high commodity prices and lower interest rates supporting overall economic activity. Inflation is expected to rise to 2.7% in the third quarter and then fall back to near the 2% target level next year.
Under the backdrop of high global tariff rates, global economic activity has weakened since February this year, reflecting a shift towards protectionist policies in some major economies, and growth forecasts for the U.S. and Chinese economies have also been downgraded, reflecting the impact of tariff increases. The committee ultimately passed the decision to cut rates by 25 basis points with a vote of 5 to 1.
Market Overview
U.S. Stocks: All three major U.S. stock indices fell, with the Dow Jones down 0.58%, the S&amp;P 500 down 0.56%, and the Nasdaq down 0.51%.
European Stocks: European stock markets generally declined, with the German DAX 30 index down 0.78%. The French CAC 40 index fell 0.59%. The UK FTSE 100 index dropped 0.59%.
Bond Market: The yield on the U.S. 10-year benchmark Treasury bond is about 4.47%, up 3 basis points from the previous trading day.
Commodities: Gold fell 0.38% to $3,287 per ounce. WTI crude oil rose 1.29% to $61.86 per barrel.
Foreign Exchange: The U.S. dollar index rose 0.32% to 99.8. The USD/JPY rose 0.36%, while the EUR/USD fell 0.32%.
Cryptocurrency: Bitcoin fell 1.07% in 24 hours, currently at $107,567. Ethereum rose 0.76% in 24 hours, currently at $2,677.
Hong Kong Stocks: The Hang Seng Index night market futures closed at 23,132 points, down 107 points, 126 points lower than yesterday's Hang Seng Index closing of 23,258 points, with a turnover of 5,243 contracts. The night market futures for the National Index closed at 8,389 points, 55 points lower than yesterday's National Index closing.
Global Company News
NVIDIA's Q1 results exceeded expectations, with after-hours stock price rising 4.3%.
NVIDIA's stock rose nearly 6% in after-hours trading. In the first fiscal quarter, revenue was $44.1 billion, a year-on-year increase of 69%, compared to market expectations of $43.29 billion. Data center revenue for the first fiscal quarter was $39.1 billion, a year-on-year increase of 73%, with an estimate of $39.22 billion. Net profit for the first fiscal quarter was $18.78 billion, a year-on-year increase of 26%. NVIDIA expects second fiscal quarter revenue to fluctuate around $45 billion, with analysts expecting $45.5 billion
NVIDIA expects second-quarter operating revenue of $45 billion, lower than analysts' estimate of $45.5 billion, mainly due to the anticipated $8 billion loss from the H20 model chip, but the provision amount is less than market expectations.
Morgan Stanley predicts that a 25% tariff is insufficient to move iPhone production back to the United States.
According to The Wall Street Journal, analysis from Morgan Stanley's U.S. public policy team indicates that for Apple, even if Trump follows through on his threat to impose a 25% tariff on foreign-made iPhones, it will not change Apple's strategy, as producing iPhones overseas is cheaper.
Analysts point out that even assuming there are no approval issues and a trained workforce, it would take at least 9 months to start and operate a medium-sized consumer electronics assembly plant in the United States. Considering that Apple would need multiple factories and possibly hundreds of thousands of seasonal workers skilled in high-tech machinery to produce over 65 million iPhones annually for the U.S. market, this would take several years, and this does not even account for the fact that the cost of producing iPhones in the U.S. could be 75% higher than in China or Southeast Asia.
In contrast, imposing a 25% import tariff on materials costing about $450 would increase the cost of each device by about $110. Apple would only need to raise prices globally by less than 5% to fully offset the impact of the tariff.
Three major German automakers reportedly discuss investment in exchange for tariff exemptions with the U.S.
According to German business reports, German automakers Volkswagen, BMW, and Daimler are in close discussions with U.S. Secretary of Commerce Gina Raimondo to invest billions of dollars in the U.S. in exchange for an exemption from the 25% auto tariff, with hopes of reaching a consensus by early July.
Reports indicate that one of the U.S. hopes for the agreement is for BMW to establish a large facility in Southern California. BMW CEO Oliver Zipse stated that the company is currently in a solid position and hopes to receive a tariff reduction from the U.S. starting in July.
Today's News Preview
Speech by Bank of England Governor Bailey
Canada's first-quarter current account
U.S. initial jobless claims for the week ending May 24
U.S. first-quarter real GDP annualized quarterly rate revision
U.S. EIA crude oil inventory for the week ending May 23
Speech by Federal Reserve Governor Cook

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The U.S. federal court ruled that Trump's tariffs are "illegal," the dollar index broke through the 100 mark, and gold plummeted nearly 1%. The results of Japan's 40-year government bond auction showed weak market demand, and long-term bond yields rebounded. Nvidia's Q1 results for fiscal year 2025 exceeded expectations, with its stock price rising 4.3%. European and American stock markets generally declined, with most large tech stocks closing lower. WTI crude oil rose 1.29%, while Bitcoin fell 2%

- The Japanese 40-year bond auction on May 28 revealed weak market demand, with a bid-to-cover ratio of 2.2, the lowest since July 2023.  
- Nvidia's Q1 2025 earnings exceeded expectations, leading to a 4.3% after-hours stock price increase, while major U.S. and European indices fell.  
- The U.S. Federal Court ruled that Trump's tariffs were illegal, impacting the dollar index and leading to significant market reactions, including a rise in the Nasdaq 100 index.

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May 29 Financial Breakfast: U.S. Court Rules Trump's Tariffs "Illegal"! Dollar Breaks 100, Gold Plummets Nearly 1%