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The Big Picture

Energy

U.S. Oil Drilling Slows as Companies Cut Back on Activity

Oil drilling activity in the United States continued to decline this week, with the total rig count falling to 578. That’s 25 fewer than last year.

Gas and oil companies are holding back as prices remain too low to justify ramping up.

Active rigs have fallen even in busy regions like the Permian Basin. Crews that complete wells are also scaling down, showing that companies are being cautious with spending.

Many producers delay equipment upgrades and trim service contracts as part of broader cost control efforts. This has ripple effects on smaller contractors and service firms that support drilling operations, especially in states like Texas, New Mexico, and North Dakota.

At the same time, overall oil production in the U.S. is holding steady. While fewer new wells are being drilled, existing wells continue to produce at strong levels.

This signals a shift in strategy for the U.S. energy market. Companies are focused on protecting profits, not pushing for more volume. This careful approach may help support prices over time, but it also means fewer jobs and slower growth in oil-producing areas.

With summer approaching and prices still under pressure, the next few months will be key to watching how long this pullback continues.

International Finance

China Sells $18.9B in U.S. Treasuries as Foreign Holdings Hit All-Time High

Foreign demand for U.S. Treasuries remains historically strong, even as China pulls back. The global holdings of U.S. government debt have now crossed $9 trillion, reflecting continued appetite from international buyers despite shifting geopolitical conditions.

China reduced its U.S. Treasury exposure by $18.9 billion, continuing a long-term trend. At the same time, the United Kingdom increased its holdings and now ranks as the second-largest foreign creditor to the United States, behind only Japan.

The Cayman Islands and Canada also posted notable increases, signaling a broader reshuffling of America’s external debt holders.

The implications for the U.S. are twofold. On one hand, foreign appetite for Treasuries remains solid, helping to stabilize bond markets amid ongoing deficit spending.

On the other hand, the changing mix of buyers may alter how the government prices and manages new debt, especially as large holders like China scale back.

This dynamic reinforces the importance of maintaining steady institutional demand and signals a growing reliance on financial centers rather than strategic trade partners.

With debt issuance expected to remain elevated throughout the year, attention will likely shift from who’s buying to how long they’re willing to keep buying, and at what price.

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Clean Fuel

$300M LNG Marine Fuel Facility Cleared for Construction in Texas

After securing final federal permits, a new liquefied natural gas (LNG) marine fuel facility is moving forward on the U.S. Gulf Coast. The $300 million project on the Texas City Ship Channel will begin construction later this year.

The facility will supply LNG by fuel barge to ships in the Houston-Galveston area, supporting the region’s growing fleet of LNG-powered vessels.

This project is led by Galveston LNG Bunker Port, a joint venture between Pilot LNG and Seapath that aims to deliver its first fuel in 2027.

Once operational, the site will produce 360,000 gallons of LNG per day in its first phase, with a second phase doubling capacity. This marks only the second dedicated LNG bunkering facility in the U.S., following a similar site in Florida.

This project supports the broader shift toward cleaner marine fuels for the energy and shipping sectors while strengthening Gulf Coast infrastructure.

Its strategic location near Port Houston, the country’s busiest port by tonnage, positions it as a long-term supply hub in the maritime fuel transition.

With final authorizations secured, the project reflects growing alignment between energy investment, environmental compliance, and logistics modernization across U.S. ports.

Metrics to Watch

• Aa1 Rating: Moody’s downgraded U.S. debt to Aa1, a hair below its prior Aaa rating (the highest possible), pushing equities down and yields up.  

• Housing Starts: New construction barely budged in April, rising just 1.36% and bucking the typical spring building surge trend.  

• Consumer Sentiment: Buyer bearishness abounds, too, as the University of Michigan’s monthly survey dropped to 50.8 (its second-ever lowest reading).  

• Inflation Forecasts: U.S. consumers expect massive inflation increases over the next year, with survey respondents projecting a whopping 7.3% by May 2026.

Market Movers

 🚘 Automotives, Made in America: Carmakers are struggling to hit 100% Made in America labeling, with Ford’s (NYSE: F) current best effort (the 2025 Expedition) comprising 58% foreign-made parts. This roughly 60/40 split may be manufacturers’ best effort while maintaining reasonable unit economics - Ford CEO Jim Farley said an all-American auto would cost $50,000 for budget models. 

🧬 Genetic Roll-Up: Regeneron Pharmaceuticals (NASDAQ: REGN) plans to buy near-defunct genetic testing company 23andMe. The concept of a major pharma stock gaining access to troves of (potential) patient DNA records is causing a stir and may lead to increased regulation on who can do what with genetic data, with knock-on effects across multiple emerging biotech sectors.

🛍️  eComm Expansion: More competitors are looking to snag a slice of Amazon’s (NASDAQ: AMZN) eCommerce dominance, and it isn’t just existing players like Walmart (NYSE: WMT) posing a threat. Instead, startups and upstarts are gunning for Amazon on the heels of increasingly poor on-site seller sentiment, including Peter Thiel-backed company Stord, which just bought out a central UPS (NYSE: UPS) subsidiary to expand its scope.  

🇨🇳 Trade Talk Breakdown? China is accusing the U.S. of deliberately sabotaging trade and tariff talks just days after a preliminary 90-day pause started. Specifically, Chinese spokesmen claim that America’s industry-wide Chinese chip warning targeting Huawei is “discriminatory” and “market distorting.”

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Market Impacts

Equities: Retailers should expect to “EAT THE TARIFFS” and “not charge valued customers ANYTHING,” according to President Trump in a stern admonishment to Walmart (NYSE: WMT) via Truth Social. Cost-friendly retailers like Walmart and Target (NYSE: TGT) have razor-thin margins, so absorbing tariff costs should decimate the entire sector if the 90-day pause ends unresolved.

Bonds: Long yield exploded this week on news of the US credit rating downgrade, with the 30-Year hitting 5%. That’s just barely shy of 2023’s 5.18% peak, which, in turn, was the highest yield since 2007 before the Fed slashed rates in reaction to 2008’s Global Financial Crisis and began a decade-long quantitative easing status quo.     

Currencies: Unsurprisingly, the credit hit pushed dollar values back down after a temporary respite from tariff pressures. Bloomberg’s dollar index (DXY) fell back to mid-April levels as international investors restarted the global “sell America” trend.    

Commodities: And, of course, the “gold trade” is back on the table after slowing somewhat following the tariff pause. Gold spiked toward the highest daily price gain in two weeks after dropping nearly 7% since early May.

Key Indicators to Watch

• 📅 Initial Jobless Claims  – May 22nd: Analysts expect a slight rise in new claims this week. 

• 📅 Existing Home Sales (April) – May 22nd: New starts are suffering, but whether the pain extends to existing housing remains to be seen.   

• 📅 New Home Sales (April) – May 23rd: Increasing inventory could mean the housing bubble is about to burst if sales don’t start ticking upward.

🧩 Everything Else

• Can stablecoin legislation save the U.S. dollar? Yes, according to a Deutsche Bank analyst.

• Don’t worry about the credit downgrade, says Treasury Secretary Scott Bessent - it’s just a lagging indicator and doesn’t reflect the present reality. 

• WSJ columnist Jon Sindreu more or less agrees, saying that “credit ratings are mostly meaningless” for countries like the U.S. 

• Here’s the Trump admin’s specific warning against Huawei chips that could threaten trade talks (referenced above).

• Used car dealers are leveraging tariff confusion to tack on new fees, surprisingly unwary consumers.