Wednesday - May 21, 2025
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 21 May 2025
⏱️ 6 minutes
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Summary
Market Decline and Bond Yield Surge Analysis - May 21st
In this episode of Dividend Cafe, Brian Szytel discusses the significant market drop on May 21st, highlighting the Dow's 816-point decline and the movements in S&P and Nasdaq. He explains the rise in bond yields, specifically in 10-year and 30-year notes, and the impact of a lackluster 20-year bond auction following a credit downgrade. Additionally, he covers the unusual drop in the dollar amidst rising interest rates, the influence of downbeat retailer earnings, and geopolitical tensions between Israel and Iran. The episode wraps up with a preview of upcoming economic data releases including jobless claims, PMI numbers, and home sales.
00:00 Introduction and Market Overview
00:27 Bond Yields and Auctions
01:53 Year-to-Date Market Performance
02:11 Global Market Reactions
02:50 Geopolitical and Economic Factors
03:25 Conclusion and Upcoming Data
Links mentioned in this episode: DividendCafe.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.0 | Welcome to Dividend Cafe. This is Wednesday, May the 21st. Brian Saitel with you here on a second down day in markets. |
| 0:20.6 | We had more of a move today. The Dow was |
| 0:22.7 | actually down 816 points. So a big move lower. That's about 1.9%. S&P was down about 1.6%. Nasdaq was |
| 0:31.0 | down a little less on some positive AI headlines and things was still down 1.4%. So across the |
| 0:37.2 | board, some red ink in the equity |
| 0:39.2 | market. The part of the reason of that is that yields on fixed income on bonds all moved higher |
| 0:44.7 | today, both in tens and in 30s. There was a yield flattener, meaning short-term rates moved up a |
| 0:49.8 | little bit more than long-term rates did. But 10-year was up 11 basis points, closed at 460. So 30-year |
| 0:56.5 | yields today were up about eight basis points closed at 5.08. So let me bring it back here real |
| 1:02.8 | quick. A 10 basis point or 11 basis point move up in tens is a meaningful amount in a day. We had a 20-year |
| 1:08.9 | bond auction today in the U.S. go off, I guess, worse than |
| 1:12.7 | expected. It was a 5.047 yield, which was a whopping 1.2 basis points higher than what they |
| 1:19.9 | thought it was going to be. So that was on $16 billion worth of notes. But since it was the first |
| 1:24.6 | long-term auction after the credit downgrade over the weekend, |
| 1:28.1 | I think markets paid a little bit more attention to it. |
| 1:30.5 | All that said, let's look at where 10-year yields are today. |
| 1:34.2 | We're at 459, 460 today. |
| 1:37.0 | We started the year at 458. |
| 1:40.7 | So, look, I know if you put your hand over part of a chart and you just focus on one short-term |
| 1:46.8 | sector, a section of it, things can look dramatic. |
| 1:49.5 | Oh my gosh, yields have gone up so much and the dollar's gone down so much. |
... |
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