Bond Vigilantes Are Back

2025-05-26 09:00:00 ET

Summary

• US equity markets slumped this past week after the critical tax cut package narrowly passed the House but faced roadblocks in the Senate amid concern over the impact on deficits.
• Meanwhile, tariff-related commentary from the White House again turned hawkish following several weeks of dealmaking, as the 90-day negotiating "pause" is now over halfway complete with only one major deal.
• After threatening the European Union this week with a 50% tariff on June 1st amid disappointing negotiating progress, the White House extended the deadline to July 9th this weekend.
• Following a surge of 5% last week, the S&P 500 slumped 2.6%. Pressured by a jump in long-term Treasury yields, REITs and other rate-sensitive sectors were laggards this week.
• Office REIT Paramount Group, which went public in 2014 in the largest REIT IPO at the time, surged 21% this week after it announced that it will start a review of strategic alternatives to maximize shareholder value, which will presumably include a potential sale of the company and/or its individual properties.

Real Estate Weekly Outlook

US equity markets slumped this past week - while long-term Treasury yields swelled to three-month highs - after the critical Trump tax cut package narrowly passed the House but faced roadblocks in the Senate amid concern over the impact on fiscal deficits and anemic cuts to runaway government spending. Meanwhile, tariff-related commentary from the White House again turned hawkish following several weeks of dealmaking, as the 90-day negotiating "pause" on the "Liberation Day" tariffs is now over halfway complete with only one major trade deal completed. After threatening the European Union this week with a 50% tariff on June 1st amid disappointing negotiating progress, the White House extended the deadline to July 9th this weekend - consistent with the deadline on the broader reciprocal tariffs....

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