Favorable Nvidia Earnings, Revised U.S. GDP Data, and A Significant Court Ruling Against U.S. Tariff Policy – Currency Thoughts
Favorable Nvidia Earnings, Revised U.S. GDP Data, and A Significant Court Ruling Against U.S. Tariff Policy
May 29, 2025
Nvidia’s first quarter earnings leaped over 70% year-on-year, crushing analyst expectations and eliciting a 5.4% pre-open jump in the AI computer chipmaker’s share price.
A small revision to U.S. quarterly GDP growth last quarter from -0.3% at an annualized rate to -0.2% in the second of three planned estimates masks some sizable changes in the components of aggregate demand. Personal consumption and residential construction were revised lower, and net exports exerted an even larger drag. Alternatively, revisions to non-residential business investment and government spending had a positive effect on revised GDP. The PCE price deflator’s annualized quarter-on-quarter pace of 3.6% was the same as estimated previously but a full percentage point above the pace in the final quarter of 2024. Excluding food and energy, the PCE price deflator’s rise between 4Q and 1Q was revised to a lower 3.4% from 3.5% reported originally.
New U.S. jobless insurance claims grew 240k last week, exceeding expectations. Yet another data release today, April pending home sales showed the largest monthly slide (-6.3%) in a year and a 2.5% drop compared to the year-earlier level.
The three judges on the U.S. Court of International Trade has ruled that invoking national emergency claims to justify broad tariffs embodied in the Liberation Day and subsequent reciprocal U.S. tariffs was an illegal interpretation of the 1977 International Emergency Economic Powers Act of 1977 and imposed a permanent stop to those tariff increases. The ruling covers a major portion of the tariff hikes imposed and threatened by the Trump Administration, which will be appealing the ruling in Federal Court.
The dollar was showing very little net movement from Wednesday closing levels just prior to the release of U.S. data at 08:30 EDT this morning but was down 0.3-0.4% an hour later. The Nasdaq and S&P 500 rose 1.3% and 0.7% at the open, while the DOW ticked just slightly higher.
In contrast to a one-basis point rise in the 10-year Japanese JGB yield today, comparable sovereign debt yields are down by three basis points in the United States, Germany, France and Spain and by five basis points in the U.K. and Italy.
The price of gold is 0.6% higher while that of oil is 0.6% softer. A previous 0.7% rise overnight in the price of Bitcoin, which has been increasingly influence by the perceived power of President Trump, has shifted to a small net downtick on the day.
Central bank interest rates were sliced today by 25 basis points in both South Korea and South Africa.
South Korea‘s new Base Rate becomes 2.50%, its lowest level since October 2022. A peak of 3.5% had been maintained from January 2023 until an initial cut last October. Quarter percentage point reductions were also done in November and February. A statement accompanying today’s decision describes sluggish growth and predicts low and steady inflation. GDP fell 0.2% last quarter and recorded its first year-on-year decline (-0.1%) since late 2020. On-year CPI inflation averaged 2.1% over the first third of 2025.
After holding the South African policy interest rate at 8.25% from May 2023 until an initial 25-basis point cut in September 2024, three more reductions have now been made to 7.25%. All the moves have been by a quarter percentage point, but one of the six policy board members today favored a drop of 50 basis points. A statement of explanation tweaks the inflation target of 3-6%, proclaiming that officials will be aiming for the range floor of 3.0% rather than its mid-point of 4.5%. But projected growth has been lowered by a half percentage point in 2025 to 1.2%, and inflation this year is expected to 3.2%, down from a prior projection of 3.6%. The overall environment, therefore, should be conducive to more rate cutting.
Private business investment in Australia remained weak early this year, dipping 0.1% in the first quarter and recording its first year-on-year decline since late 2020.
Japanese consumer confidence improved in May for the first time since October, but the index level at just 32.8 remained quite low historically.
Producer prices inflation during April printed at a 5-month low in Singapore of -1.1% and matched March’s 4-month low of 0.5% in South Africa.
Italian consumer confidence and business confidence among manufacturers rose in May to 3-month highs, helped by the delayed imposition of higher U.S. tariffs.
Retail sales in Spain rose 0.7% in April and posted their biggest year-on-year advance (4.0%) so far in 2025.
Canada experienced its smallest current account deficit last quarter (- CDLR 2.1 billion) since the final quarter of 2023. It was also only about three fifths as large as analysts were anticipating. Even though Canada has recorded eleven straight quarterly current account deficits, it has been a particularly public target of President Trump’s tariff policy.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea, South Africa Reserve Bank, U.S. court ruling on tariffs, U.S. GDP and PCE price deflator
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