The US poses a risk to bond investors
Bond investors are facing many uncertainties. If implemented, trade wars and tariffs are likely to cause inflation. On top of that, there is the Trump 'big and beautiful' tax bill, which was approved by the US House of Representatives late last week and is expected to increase the US federal deficit. This week's case study focuses on the US 10-year Treasury yield. Although our technical analysis indicates bullish trends for US equity indices, consolidation may be imminent. In the meantime, the OMX is falling behind the other indices.
Case of the week: TACOs or tariffs?
US ten-year Treasury interest rates have been volatile in 2025. However, unlike rates on many other sovereign bonds, they have remained almost unchanged overall throughout the year. The graph below shows the US 10-year yield versus the German 10-year Treasury yield over the last three years.
US and German 10-year Treasury yields (%), three-year daily chart
Bond investors are facing many uncertainties. If implemented, trade wars and tariffs are likely to be inflationary. It is worrying that the Trump administration is promoting tariffs as a potentially important source of revenue ('taxing foreigners') rather than simply as a negotiating tool in trade talks. If Trump is more determined to implement tariffs than Treasury bulls are hoping, the bond market may sell off further. Meanwhile, equity markets have adopted a more tranquil trading stance, resulting in the acronym TACO ("Trump Always Chickens Out").
According to the Financial Times, treasuries were also sold ahead of Trump’s “big, beautiful” tax bill. The bill will extend the tax cuts that were implemented during the president’s first term in 2017. The Committee for a Responsible Federal Budget claims that the bill will increase the US debt-to-GDP ratio from 100 to 125 per cent.
The Federal Reserve is in a tough spot due to a combination of loose fiscal policy and potentially inflationary trade policies. In that scenario, any rate cuts seem out of the question. Despite the rate cuts implemented by the Fed last year, the 10-year interest rate has risen by around 100 basis points since October 2024. This is another indication that bond investors are becoming increasingly anxious about developments in Washington. With the July 9 deadline for the 90-day delay of reciprocal tariffs approaching and Trump’s tax bill moving through the US Congress, a jittery summer and higher interest rates are possible.
Although rates fell back somewhat after the spike following 'Liberation Day' on 2 April, the US 10-year yield has moved steadily upwards again since the beginning of May, showing a positive trend in both the daily and weekly charts.
US 10-year Treasury yield (%), one-year daily chart
US 10-year Treasury yield (%), five-year weekly chart
Macro comments
Interim reports from Nvidia and Salesforce will be released in the US on Wednesday 28 May. Meanwhile, Statistics Sweden will publish figures for April's retail sales, household lending and trade balance. In addition, France's Q1 GDP and Germany's May unemployment figures will be released, as will April's Eurozone household inflation expectations. From the US, the May Richmond Fed Index, Redbook's weekly retail sales figures, the API’s weekly oil inventory statistics and the minutes from the 7 May Fed meeting are anticipated. Please note that the Stockholm Exchange will close at 13:00 CET on 28 May, as 29 May is a public holiday.
On Thursday, 29 May, the US is set to release data on initial jobless claims, Q1 GDP, pending home sales, and weekly oil inventories from the Department of Energy (DOE). Interim reports are also expected from Costco Wholesale in the US and the Royal Bank of Canada. However, as Thursday is a public holiday in the Nordic countries, the Nordic stock exchanges will be closed for trading that day.
The macroeconomic news agenda on Friday 30 May begins with the release of Japan's April unemployment, industrial production and retail sales figures. A few hours later, Sweden's Q1 GDP, Germany's April retail sales and import prices, as well as Spain's May CPI will be announced. Shortly afterwards, Italy's Q1 GDP and its and Germany's May CPI will be announced. From North America, Canada's Q1 GDP and US personal consumption and inflation (PCE), the goods trade balance and wholesale inventories for April will be announced. From the US, the Chicago PMI and the Michigan index for May will also be released.
Nvidia (USD), five-year weekly chart
Consolidation for US equities is on the cards, while Sweden is lagging
The chart below shows the S&P 500 in a recovery phase. It is currently trading at around 5,890, which is above the MA20, MA50 and MA100. This suggests bullish momentum and room for further upside. Key support lies at around 5,770–5,785, while resistance is near the recent highs, just below 6,200. Overall, the trend remains bullish, but caution is warranted given the short-term MACD is close to generating a soft sell signal. A consolidation phase may be on the horizon.
S&P 500 (in USD), one-year daily chart
S&P 500 (in USD), five-year weekly chart
As can be seen from the NASDAQ 100 chart below, the index is currently trading above its key moving averages (MA20, MA50 and MA100). Immediate support is found around the 21,000 level, while resistance lies near the recent highs. Overall, the trend is bullish, though the index may undergo short-term consolidation before attempting a breakout.
NASDAQ 100 (in USD), one-year daily chart
Please note that the MACD indicator has generated a soft buy signal on the weekly chart below.
NASDAQ 100 (in USD), five-year weekly chart
The DAX index has resumed its strong upward trend, hitting a new high following yesterday's close. The price is now well above all the major moving averages, with the 9-day EMA leading the way, which indicates robust bullish momentum. The RSI stands at 67.74, approaching overbought levels and suggesting strong momentum, as well as the potential for short-term consolidation. The MACD also confirms positive but decreasing momentum; however, a pause or minor pullback could occur following the recent strong rally.
DAX (in EUR), one-year daily chart
DAX (in EUR), five-year weekly chart
The OMXS30 is lagging the other indices as several key moving averages have yet to be reclaimed. For a more sustained bullish trend to be confirmed, a break above the cluster of resistance near 2,560 would be needed, while a drop below 2,473 may expose the index to further downside. Overall, the index is in a consolidation zone and traders may wait for confirmation of a breakout either way.
OMX30 (in SEK), one-year daily chart
OMX30 (in SEK), five-year weekly chart
The full name for abbreviations used in the previous text:
EMA 9: 9-day exponential moving average
Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.
MA20: 20-day moving average
MA50: 50-day moving average
MA100: 100-day moving average
MA200: 200-day moving average
MACD: Moving average convergence divergence
Risks
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