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A rebound in Treasuries.

US stock futures are little changed as a rebound in Treasuries helps temper concern over America’s fiscal outlook. The S&P 500 is still headed for its biggest weekly drop since the early-April tariff selloff. Asian stocks rose for a sixth week.

Stocks in Asia rise as bonds stabilize. Treasuries hold gains following Thursday’s rally, while US equity futures wobble after the S&P 500 lost steam to finish lower. The greenback weakens against all its G10 peers.

A surge in long-term yields is threatening to upend a crowded hedge-fund bet that Treasuries will perform better than interest-rate swaps. Meanwhile, an institutional investor’s multi-billion-dollar bullish bet on US stocks has become the talk of the options market.

Meanwhile, at the Fed, the manager of the central bank’s massive portfolio of securities said its effort to reduce the size of its balance sheet is beginning to place pressure on the market for repurchase agreements.

The US Supreme Court shielded the Federal Reserve from the administration's push to fire top officials at independent agencies, a decision likely to quell concerns that Jerome Powell might be fired.

Credit: Risk montage | US Treasury/Ulrich Roth

Mr. Bessent goes to Basel: The fate of global bank regulation

Treasury Secretary Scott Bessent has hinted at a move away from international financial regulatory frameworks, suggesting a more inward-focused US approach. This shift could disrupt cooperation with bodies like the Basel Committee on Banking Supervision, threatening global regulatory alignment and financial stability. (Risk | May 21)

Goldman says hedge funds cut Magnificent Seven, bought China stocks

Hedge funds cut their holdings of the so-called Magnificent Seven technology stocks while increasing exposure to Chinese companies listed in the US during the first quarter, according to Goldman Sachs Group Inc. strategists. Funds increased their investments in Chinese firms’ American depository receipts despite heightened trade tensions. The shift highlights the growing appeal of Chinese tech stocks, which have become attractive to foreign investors on signs of the nation’s rising clout in developing new technologies. (Bloomberg Markets | May 21)

Rising fiscal worries drive Treasury yields higher

Following Moody’s downgrade of the last US AAA credit rating due to ongoing budget deficits and rising interest expenses, the House Budget Committee approved a tax-and-spending plan projected to significantly expand the national debt. While equities saw modest gains, bond markets faced heavy selling, sending long-term Treasury yields sharply higher, with the 30-year yield briefly surpassing 5%. Investors caution that the U.S. may be approaching a fiscal tipping point, as ballooning debt begins to undermine confidence in its long-term borrowing prospects. (The Wall Street Journal | May 19)

US bank lending to nonbanks jumps 20%: Fitch

US banks boosted their lending to nonbank financial institutions to $1.2 trillion by the end of March, marking a 20% increase from a year earlier, according to Fitch Ratings. The surge has sparked regulatory concerns over systemic risk, as private credit firms increasingly both compete with banks and depend on them for leverage. The International Monetary Fund has cautioned that this growing web of high leverage and interconnectedness could heighten the financial system's vulnerability. (Financial Times | May 19)

Private credit ratings under scrutiny: Conflicting interests fuel investor concerns

Ratings that grade private credit products and are used by investors to categorize debt issued by lending firms are increasingly being called into question by industry decision makers. Credit firms that bundle packages of loans to back securities, such as collateralized loan obligations (CLOs), are often able to choose the ratings provider for these issues. Critics say this can lead to conflicts of interest, as the issuer pays fees to the ratings provider while the resulting grades can significantly affect the marketability of the rated securities. (The Wall Street Journal | May 18)

Heat map detailing the global spread of Lumma malware infections and encounters across Windows devices. Source: Microsoft

Microsoft seizes domains in ransomware bust

Microsoft Corp. teamed up with law enforcement agencies worldwide to take down Lumma, a notorious hacking tool that helped cybercriminals steal passwords, launch ransomware attacks, and nab cryptocurrency. The company's digital crimes unit, working with Europol, the US Justice Department, and Japan’s Cybercrime Control Center, seized about 2,300 malicious domains that formed the backbone of the malware’s technical infrastructure, DCU Assistant General Counsel Steven Masada wrote in a blog post Wednesday. 

— Bloomberg | Cyber

AI jobs hit hard as global workforce contracts

The global workforce shrank by 4.15% in 2024, with AI-related roles dropping sharply by 15%, according to workforce intelligence firm Aura. The US saw a smaller decline in AI jobs, at 7.2%. The report attributes the reductions to budget cuts in key markets and lower labor force participation. Remote job postings also fell 20% as companies continued shifting toward on-site operations.

— CFO

New guidance released on safeguarding AI training data

The Cybersecurity and Infrastructure Security Agency (CISA) and the NSA, FBI, and international allies have published a new resource titled "AI Data Security: Best Practices for Securing Data Used to Train & Operate AI Systems." The guide underscores the vital importance of data security in maintaining the accuracy, integrity, and reliability of AI systems. It identifies key risks linked to data vulnerabilities throughout the AI lifecycle — from development and testing to deployment and operation — and offers best practices to mitigate them.

— CiSA

Illustration: Elena Scotti | WSJ, iStock

Delete Yourself, Part 2: Is your personal data on the dark web?

A few weeks ago, The Wall Street Journal covered tools that help remove your personal data from public websites. Readers quickly asked the next logical question: What about my data on the dark web? The dark web — a hidden corner of the internet — hosts illicit marketplaces where stolen data, including Social Security numbers, passwords, and passport information, is bought and sold. The price tags shown above, sourced from cybersecurity firm NordVPN, reveal just how valuable your information can be after a data breach. This guide will show you how to check if your personal details have ended up on the dark web — and what steps you can take to protect yourself from potential misuse.

— The Wall Street Journal

Fictional fiction: AI blamed for fake titles on summer book list

A recent summer reading list recommended by a syndicated newspaper column featured more fiction than intended, including books that don’t exist. The content provider has fired the writer responsible, saying he used artificial intelligence to generate the list without properly verifying the results. The story appeared in the “Heat Index: Your Guide to the Best of Summer” section, which ran last week in both the Chicago Sun-Times and The Philadelphia Inquirer.

— Associated Press

Dolphin whistle breakthrough earns $100,000 prize

A team from the Woods Hole Oceanographic Institution and the Sarasota Dolphin Research Program has been awarded the $100,000 Coller-Doolittle Prize for pioneering work in decoding bottlenose dolphin whistles. Using noninvasive techniques, the researchers successfully identified various whistle types, including what may be alarm signals.

— The Guardian | London