Dollar Hits One-Month Low

💵 The Dollar drops to a one-month low in lieu of growing credit concerns of debt investors and the cautious stance of the Fed.

Author

Ankit Sinha
May 22, 2025

Silver banana goes to…




In this issue of the peel:

  • 📊 The S&P and the NASDAQ tumbled 1.61% and 1.41% respectively today as concerns arose regarding U.S fiscal policy and rising treasury yields.

  • 💸 The U.S 30-year treasury rose an additional 11 basis points as the $16 billion treasury selloff continued.

  • 💵 The dollar drops to a one-month low in lieu of growing credit concerns of debt investors and the cautious stance of the Fed.

Market Snapshot

Feature: Scott L. Bok, Chairman of Greenhill & Co.

Last week, Scott Bok, Chairman and longtime CEO of Greenhill, spoke to our WSO Academy students about his experience on Wall Street. We highly recommend you read his book, “Surviving Wall Street.”

Dive into this riveting memoir as he chronicles four decades on Wall Street. From the firm's ambitious inception to its landmark IPO and eventual sale, Scott offers a firsthand account of navigating the volatile tides of the financial industry.

Experience the behind-the-scenes of major M&A deals, the challenges of financial crises, and the intricate dance of power within corporate boardrooms.

Go behind the scenes of significant mergers and acquisitions, navigate the complexities of financial crises, and witness the delicate power dynamics within corporate boardrooms.

Banana Bits

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Macro Monkey Says

Major Indices Dive on Fear Spike

The Dow sheds 800 points today, with the S&P 500 and the NASDAQ following suit for the largest one-day loss in over a week. 

The main reasons for this tumble were growing investor concerns regarding the new credit rating of the U.S, rising treasury yields, as well as fiscal policy uncertainty. But what pushed equity investors over the edge? They already had one day of trading since Moody’s downgrade, so what caused investors to sell? 

In short, the general inaction of the U.S government and massive selloff of U.S treasuries caused equity investors to lose confidence in the security of the stock market. Additionally, President Trump’s newly proposed tax bill likely didn’t help concerns surrounding fiscal responsibility, as if it is passed, it will likely add an additional $3-5 trillion to the national debt. 

In addition to the 30-year U.S treasury yield increasing another 11 basis points (0.11%) to about 5.1%, the 10-year treasury rose to about 4.6%, again echoing investor sentiment of the increased risk associated with bonds and the major selloff prompted by Moody’s downgrade. 

Investors and consumers alike are also increasingly concerned with the prospect of stagflation (when unemployment and inflation both reach high levels), a true economic disaster. Furthermore, one of the main reasons many are concerned about stagflation right now is because the U.S is currently exhibiting some key signs. 

For example, economic growth is starting to slow down as the economy contracted 0.3% in Q1 2025, which is the effect even before inflation has hit. Speaking of inflation, while it hasn’t made its mark on the U.S economy quite yet, many economists are predicting its impending effect on prices, despite the mild CPI report earlier this month. 

Furthermore, consumer confidence is in a sharp decline, a telltale sign of not only stagflation but also slowed economic growth. Cleveland Fed president Ben Hammack considers the prospect of stagflation most likely under conditions of economic slowdown and rising inflation, and notes that it's quite a real possibility.  

The Takeaway?

Despite the fact that stagflation is an extremely rare economic occurrence, given that it has not happened in several decades, it’s certainly not out of the question considering current inflationary expectations and slowed economic growth. While the inflation portion of stagflation is likely to come, unemployment has not shown outward signs of drastically increasing, but rising prices caused by tariffs can change that. 

Career Corner

Question

I'm aiming to recruit IB San Francisco and currently go to Berkeley. I've run out of Berkeley IB alumni in SF to connect with on LinkedIn. What should my next move be? Also how many calls should I be aiming to have over the next few months (I'm recruiting summer 2026). I've had 11 calls so far.

Answer

Some students are hitting 5-6 calls a week. It's about the depth of the connection and building a long-term relationship. Find warm connections: referrals, alumni, interest clubs, common firms, etc.

Head Mentor, WSO Academy

What's Ripe

We Ride (WRD) 21.4% 

  • We Ride, an autonomous car company, announced earnings today and absolutely crushed it, reporting significantly higher than expected revenue, nearly doubling its robotaxi sales. 

  • They also reported only a narrow loss, which was significant progress from their last earnings report, which documented a major loss. We Ride also announced a share buyback program to reward shareholders. 

Dycom Industries Inc. (DY) 15.8%

  • Dycom Industries, a specialty contracting company, saw major gains today as they reported earnings and, similar to We Ride, crushed expectations. They reported a year-over-year revenue increase of 10.2%, reporting $1.259 billion in revenue, above the $1.19 billion analysts were expecting. 

  • They also beat the expected adjusted EPS of $1.6 with an actual adjusted EPS of $2.09.

What's Rotten

Wix.com Ltd. (WIX) 16.2%

  • Wix, a software company, saw major losses today in light of their mixed Q1 2025 earnings report, which concerned investors. Although many Wall Street Analysts rate Wix as a buy/strong buy, Wix slightly missed revenue expectations, and coupled with negative overall market sentiment, there was a massive selloff for Wix. 

  • However, banks like Raymond James still have extremely optimistic target prices for Wix, representing a buying opportunity for investors. 

VF Corporation (VFC) 15.8%

  • VF Corporation, a global footwear and apparel company, saw a significant plunge in their share price today as they announced earnings. 

  • In addition to announcing a 5% decline in year-over-year revenue, the Vans brand reported a whopping 22% drop in sales. In reaction to this news, banks have reduced their price targets for VFC and face extreme uncertainty with the ongoing trade war and tariffs. 

Thought Banana

The Depreciation of the U.S Dollar

According to macroeconomic theory, when a country imposes tariffs, it should cause their currency to appreciate. 

This is because when imports decrease, it should decrease the supply for the domestic currency on the forex market, increasing the currency's value. Despite this concept and Donald Trump’s towering tariffs, the dollar continues to depreciate, but why? 

In reality, there are several reasons. First and foremost, Moody’s credit downgrade and the significant fiscal deficit of the U.S have mitigated overall investor confidence and caused a depreciation in the dollar. 

Additionally, something that macroeconomic theory does not account for is retaliatory tariffs, which were implemented by countries against which the U.S imposed tariffs. These retaliatory tariffs can essentially offset the appreciation of the country's own tariffs. 

Furthermore, the fear of inflation and economic downturn has negatively impacted consumer sentiment, and with growing concerns of recession, has undoubtedly weakened the dollar. Given these facts, how does a weakening dollar affect the overall American economy?

A weaker dollar means that foreign goods will become more expensive, further increasing the price of imports, worsening America’s already fragmented national debt situation. 

Additionally, everyday prices may increase as a result of the weakening dollar, as retailers could jack up their prices. On top of that, U.S.-based companies that source or manufacture elsewhere may find their costs increasing due to a weakening dollar, which is yet another road to higher prices. 

A weaker dollar also makes U.S debt (specifically treasuries) much less desirable, as the weakening dollar has been a contributing factor to the massive 30-year treasury selloff. 

The Takeaway?

Since investors are losing confidence in the U.S government's ability to manage their fiscal responsibilities properly, the weakening dollar essentially serves as a warning sign. A weakening dollar driven by factors that aren’t cyclical is a giant neon sign that says investors are losing confidence in America’s economic credibility. 

The weakening dollar goes beyond just the implications of currency, it is a direct sign of not only the declining economy, but also how the rest of the world is viewing America’s diminishing financial prowess. 

The Big Question: Does the world still trust the U.S. economy—or is the dollar’s decline proof that confidence is cracking?

Banana Brain Teaser

Previous

City X has a population 4 times as great as the population of City Y, which has a population twice as great as the population of City Z. What is the ratio of the population of City X to the population of City Z?

Answer: 8:1

Today

In a certain sequence of 8 numbers, each number after the first is 1 more than the previous number. If the first number is -5, how many of the numbers in the sequence are positive?

Send your guesses to [email protected]

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