Facts
- The U.S. stock exchange remains closed today, while futures are slightly gaining after Donald Trump postponed aggressive tariffs on the EU.
- Last week, the United States lost its top AAA credit rating at Moody’s agency.
- The US500 futures contract on the S&P500 index has rebounded sharply from the local low of April 7, 2025, which was around 4850 points – it is now again trading in the region of 5900 points.
- According to estimates by The Budget Lab at Yale University, despite the tariff easing between the U.S. and China in May, as much as 40% of the negative effects of the ongoing trade war will still be felt by the American economy.
- Another potential interest rate cut by the Federal Reserve is currently priced in no earlier than October 2025.
Recommendation
Short position on US500, at market price
- Stop loss: 6000
- Take profit: 5730
Opinion:
The upward streak on Wall Street, which pushed the US500 contract to levels near 6000 points, was halted after last week’s decision by Moody’s to downgrade the U.S. credit rating. Although the agency’s move does not necessarily translate immediately into Treasury bond volatility, it represents an important warning signal for investors. Moody’s emphasized that the U.S. fiscal deficit is on an unsustainable trajectory – according to Congressional Budget Office calculations, federal debt will exceed 156% of GDP by 2055, and debt servicing costs will already reach $950 billion in 2025, nearly matching the defense budget. Additionally, the lack of political consensus on fiscal reforms raises concerns about the government’s limited ability to respond in case of a recession.
These concerns are compounded by growing skepticism regarding the durability of the dynamic index rebound – the US500 has risen more than 20% since the early April local low. Data from The Budget Lab (Yale University) shows that despite the easing of tariffs in May, the U.S. economy will still feel 40% of the negative impacts of the trade war. In this context, the current correction may turn into a deeper downward move, and a return below the support zone at 5730 points seems a likely scenario. We recommend taking a short position at market price, with a stop loss order in place to minimize risk of loss.
Methodology
The recommendation was based on an analysis of geopolitical relations, including the current trade situation between the United States and its key partners. Additionally, we took into account the report from Yale University (The Budget Lab) and a technical analysis of the US500 chart. Target levels were determined using classic support and resistance levels.
