Private Equity Goes Public as Retirement Admins Open the Door to Alternative Assets

Hello and welcome to Macro Notes, your go-to source for the latest macroeconomic trends, market-moving news, and key indicators to watch. We cut through the noise to bring you actionable insights in just a few minutes.

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The Big Picture

Global Trade

Tariff Pause Eases Global Tension Ahead of July Negotiations 

With the United States postponing a 50% tariff on European Union goods, all eyes are on the negotiators tasked with finalizing a new trade agreement by July 9. The delay comes after weeks of escalating tension and signals a temporary pause in what could have become a major transatlantic trade clash.

Originally scheduled for June 1, the proposed tariffs had drawn strong responses from European officials, who pushed for a renewed dialogue. U.S. trade authorities confirmed over the weekend that formal discussions will continue into early July, leaving a short window to resolve key issues on industrial goods, digital trade, and cross-border investment policy.

The announcement triggered a rebound across European financial markets. Major indices in Paris and Frankfurt rose over 1%, reflecting optimism that renewed diplomacy could prevent broader trade disruptions. U.S. markets remained closed for a public holiday, though futures rose modestly in early trading.

This delay avoids an immediate price shock for American exporters and importers and preserves short-term supply chain stability. However, the underlying dispute remains unresolved. Without a comprehensive agreement, the risk of retroactive tariffs or broader protectionist measures may re-emerge later in the summer.

The decision reflects the ongoing challenge of balancing domestic trade pressures with global market interdependence. With billions in bilateral trade on the line, attention now shifts to whether both sides can deliver a workable compromise before the July deadline.

Trade & Industrial

$14.9B Steel Deal Signals New Phase in U.S. Industrial Policy

The U.S. government has approved a $14.9 billion foreign investment in the domestic steel industry, marking a significant industrial and trade policy shift. Following expanded commitments to domestic investment and job creation, the administration confirmed support for a Japanese firm’s acquisition of a major U.S. steel producer.

According to projections, the deal will create up to 70,000 jobs and inject $14 billion into U.S. manufacturing infrastructure over the next 14 months. Planned upgrades include facility expansions and the construction of a new mill.

The reversal comes after more than a year of political and labor opposition. Initially, executive and union leaders voiced concern over foreign ownership of a legacy U.S. manufacturer. Over time, sustained lobbying efforts and increased proposed capital commitments shifted the administration’s stance.

Labor representatives remain cautious, citing unresolved concerns over trade practices and long-term employment stability. However, the decision signals a broader willingness to accept foreign capital in exchange for domestic industrial renewal.

This marks one of the largest foreign investments in the U.S. steel sector in decades and could reshape the competitive structure. Additional capacity and modernization efforts may affect steel pricing and downstream manufacturing costs. The outcome could also influence future reviews of foreign acquisitions.

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Fiscal

Treasury Pulls Plug on Pennies After 200 Years of Circulation

The U.S. Treasury has stopped ordering new penny blanks, marking the end of production for the one-cent coin. The Mint will continue to strike pennies until it exhausts its current inventory, with the final batch entering circulation early next year.

Producing each penny now costs 3.69 cents, with the Mint confirming a 20 percent increase in production costs in 2024 alone. Ending this program will save taxpayers an estimated $56 million annually.

Retailers will need to adjust pricing practices as pennies disappear from circulation. Many will round prices to the nearest nickel. However, the nickel also poses a cost problem, requiring 13.78 cents to produce each coin.

The last time the government discontinued a coin was in 1857 when it retired the half-cent. Since then, the production of low-value coins has continued despite growing inefficiencies. One-third of Americans already say they don’t use pennies in daily life.

The Treasury acted within its legal authority to halt production, although only Congress can eliminate coins entirely. Officials framed the move as a practical cutback in a time of rising federal costs, not a symbolic decision.

Collectors may hold onto the final batches, but in circulation, pennies will gradually vanish. By ending this long-standing program, the Treasury shifts attention toward more efficient coinage and lets go of a denomination that no longer makes financial sense.

 Metrics to Watch

• EU Tariff Threats: Trump recently threatened the European Union with 50% tariffs across the board by June 1st. 

• Shipping Cancellations: 20% of planned shipments expected to arrive at the Port of L.A. were cancelled in May, with expectations that cancellation rates will increase in June.   

• China Trade Decline: Trade with China has already declined 30% compared to 2023 levels, despite the 90-day tariff pause.    

• Credit Card Interest Rates: Consumer revolving credit averages hit all-time highs in May, breaking 20% across all borrower profiles and card types.

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Market Movers

• Take a Penny, Leave a Penny: Get ready for rounding - businesses will have to bump up pricing to the nearest five cents in 2026 as the U.S. Government reveals plans to phase out one-cent coins. Dropping pennies from the Treasury rolls will result in $56 million in annual savings, as metals costs mean that each coin costs four times more to produce than it’s worth on the street.

• Private Equity, Public Access: 401(k) plan administrators will begin rolling out initial authorization for retirement savers to access alts like private equity, private credit, and real estate in their accounts in the coming months. One such admin, Empower, plans to offer the assets as part of a managed service portfolio to some of its 19 million customers by the end of 2025, based on employer opt-in requirements. 

• Retailer Price Hikes: Despite Trump’s recent warnings directed at retail execs to limit price hikes post-tariff, a handful of major companies announced planned cost increases in the coming months. They include Walmart (NYSE: WMT), with CEO Douglas McMillon saying that the retail giant can’t “absorb all the pressure given the reality of narrow real margins,” alongside Mattel (NASDAQ: MAT) and Best Buy (NYSE: BBY).    

• Goodbye, Solar Tax Credits: Clean energy and solar stocks could face challenging times after the just-passed tax bill slashes and repeals key GreenTech credits designed to encourage solar adoption. Knock-on effects could include significant job losses across the domestic solar manufacturing sector, which seems to fly in the face of the Trump administration’s goal of re-shoring American industry.

Market Impacts

• Equities: Lowe’s (NYSE: LOW) revealed an interesting tidbit during earnings last week: consumer volume isn’t dropping, necessarily, but the rate of $500+ purchases fell dramatically. This means that price-sensitive consumers are still spending, but to the benefit of discount retailers in a move that could deal a major blow to luxury brands and high-ticket home renovation planners. 

• Bonds: Treasury Inflation Protected Securities (TIPS) are increasingly popular as tariff-induced inflation concerns rock income-focused investors. 10-year TIPS yields are currently at 2.16%, double their average since 2003, which means TIPS bought today are guaranteed to beat U.S. inflation by 216 basis points until 2035.

• Currencies: The U.S. dollar dipped (again) as part of the USD/EUR pairing after Trump’s 50% tariff threat. The dollar hit its largest one-week fall since early April when tariff talks initially began. 

• Commodities: Uranium miners are planning for a domestic gold rush after Trump’s pro-nuclear executive order last week. After just two weeks of environmental review, regulators approved a Utah uranium mine soon after the order went into effect, meaning downstream policy effects are already materializing.

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 Key Indicators to Watch

•  Consumer Confidence (May)  – May 27th: Consumer optimism is in the gutter, as we well know, so don’t expect many surprises for May’s sentiment levels.   

• Fed President Speeches in Tokyo – May 27th and 28th: Following on the heels of Trump’s U.S. Steel/Nippon Steel endorsement, Fed speeches in Japan come at an auspicious time.    

• Pending Home Sales (April) – May 29th: Analysts expect the typical cyclical April sales bump to flop this year as home prices remain high and mortgage rates even higher.  

Everything Else

• Even as some plan administrators offer alternative asset allocations in retirement accounts, private equity is lobbying the Trump administration to expand access further. 

• Funding cuts could have an undue impact on these science stocks, according to Barron’s. 

• Trump’s team is frustrated by the glacial pace of EU trade talks, which triggered the 50% tariff threat last week.

• Luxury goods in Europe may be slammed by a double threat - reduced consumer spending on pricier products alongside EU-specific trade taxation.  

• Credit markets aren’t pricing in risk sufficiently, according to JPMorgan & Chase exec Jamie Dimon.