This week’s market narrative was dominated by the U.S. sovereign-credit and tax headlines.

On Monday, Moody’s cut the U.S. long-term issuer and senior unsecured ratings to Aa1 from Aaa, making it the third major agency to strip the U.S. Treasury of its top grade. Equity indices initially slipped before stabilizing, but drifted lower again after the U.S. House of Representatives passed legislation to extend provisions of the 2017 Tax Cuts and Jobs Act. Those policy headwinds were partially offset by a stronger-than-expected Flash PMI report that signaled a rebound in manufacturing activity alongside generally solid corporate earnings.

Looking to the holiday-shortened week ahead, attention will center on the Federal Open Market Committee meeting minutes. Federal Reserve Chair Jerome Powell has already signaled that the central bank’s target range will stay anchored at 2 , but markets will comb the transcript for any hint of policy recalibration. Key context comes from the Core Personal Consumption Expenditures (PCE) Price Index, which accelerated to 3.5 y/y in Q1 2025 after 2.6% in Q4 2024. The second estimate, due next week, is expected to hold that pace. April personal-income and spending figures are also slated, with forecasters looking for a 0.4 % rise in income and a 0.1 % pullback in spending as higher prices and tariffs start to bite.

Given this economic backdrop, let us see how this impacts the performance of various investment strategies.