Investors Now Favor Microsoft Bonds Over U.S Treasury Bonds

Investors have long treated U.S. Treasuries as the ultimate safe haven. But a new contender has emerged—one you might not expect. And it’s raising serious questions about the future of global finance.

Let’s take a look at some interesting charts:

As of May 2025, the yield spread between Microsoft’s 30-year bonds and U.S. Treasury bonds of the same maturity has narrowed to a historical low, nearly reaching zero. Amid growing concerns about the sustainability of U.S. government finances, some investors now view high-quality corporate bonds (like Microsoft’s) as more reliable long-term assets than Treasuries.

Retail Buying in the “Magnificent Seven” Stocks Drops Sharply. The 10-day average amount that U.S. retail investors are putting into the seven largest tech stocks has dropped to just 12% of total retail inflows—the lowest level since 2022. This signals waning retail enthusiasm for big tech companies.

Major investment banks have vastly different forecasts for the S\&P 500 by the end of 2025. The most optimistic, Wells Fargo, sees the index hitting 7,000, while the most pessimistic, HSBC, projects only 5,600.

Perfect Synchronization? Trump 2.0 Market Performance Mirrors Trump 1.0. Comparing the S\&P 500’s performance across Donald Trump’s two terms, the current trajectory under Trump 2.0 closely mirrors that of his first term.

Europe’s Stock Rally Driven Entirely by Valuations, Not Earnings. Since 2024, the rally in European equities has been almost entirely due to rising P/E ratios. Corporate earnings, on the other hand, have declined.

The global market for AI products and services is projected to soar from $638 billion in 2024 to $3.7 trillion by 2034, representing a 20% average annual growth rate. This suggests massive potential winners in AI infrastructure and application stocks.

Now let’s look at other noteworthy charts:

Goldman Sachs Turns Bullish on Chinese Equities—3 Reasons All Linked to Yuan Strength:

1. Historically, the RMB has had a positive correlation with A-share performance. The yuan’s recent appreciation could attract foreign inflows.

2. A stronger yuan enhances forex gains for USD-denominated assets, boosting corporate profit outlooks.

3. Yuan appreciation often coincides with increased foreign holdings in Chinese stocks.

Analysts forecast over 25% returns for the Hang Seng China Enterprises Index over the next 12 months—more than double the expected return for India’s Nifty 50. The key lies in diverging earnings expectations: earnings per share (EPS) for the Hang Seng index have been revised up 4.4% this year, while Indian corporate earnings have been revised downward.

Although a trade agreement was reached two weeks ago, China’s container shipping volume to the U.S. hasn’t significantly recovered. U.S. tariffs on Chinese goods remain at 30%, continuing to suppress bilateral trade momentum.

Gold has overtaken the euro as the world’s second-largest reserve asset, now accounting for 20% of global central bank foreign exchange reserves.

U.S. Housing Affordability Drops Sharply

With mortgage rates near 7% and home prices at record highs, affordability has plummeted. First-time homebuyers now account for only 24% of home purchases, down from 50% in 2010.

As more people are priced out of buying homes, they turn to renting—putting upward pressure on rents and contributing to housing inflation.

The U.S. manufacturing PMI has historically shown a strong correlation with the S\&P 500’s EPS growth for the following 12 months. The current PMI remains in mild expansion, suggesting limited room for robust profit growth ahead.

Air travel is often an early sign of economic shifts. Given its high cost, both business and leisure travel tend to be postponed during times of economic uncertainty.

Passenger traffic through U.S. Transportation Security Administration (TSA) checkpoints is now showing year-over-year declines—an early sign of slowing consumer and business activity.