Bitcoin Hits New Highs, U.S. Debt Surge, and Global PMI Contraction: PALvatar Market Recap, May 22 2025
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Bloody hell, the banana phone keeps ringing. But first, I need to deliver the market news. I promise there'll be no Sutter Home, Chick-fil-A, Buzzballs, or other nonsense, just pure facts from Palvitar, Raoul's AI avatar. If you have no clue what I'm talking about, you missed the absolute cinema of yesterday's drinks with the real Raoul. You need to catch up, my friend, because that's where you'll hear his latest views and analysis.

And if you're a pro member, even better, as you can get direct access to Raoul, Andreas Steno and Kevin Kelly on Insider Talks at 11am Eastern or 4pm if you're in London. Now, on to the news. Bitcoin is sitting pretty after breaking through its all-time high.

At lunchtime in Europe, Bitcoin was trading for around $110,000, not far from its record of $111,800, driven by growing institutional adoption, fears over government debt, and a weakening dollar. By the way, today is Bitcoin Pizza Day. It's been 15 years since the infamous transaction of 10,000 Bitcoin swapped for two pizzas. Do you know how much they cost at today's value? More than a billion dollars.

Let that sink in. Hope they tasted better than Raoul's Chick-fil-A burger yesterday. I mentioned the debt concerns. The US federal deficit is on its way to rise by more than $3 trillion over the next decade, according to nonpartisan estimates. This is because of Donald Trump's showpiece bill that's set to cut taxes and reduce social spending. The measure passed through the House of Representatives by a single vote this morning and now goes to the Senate, where Republicans hold a slim majority.

The US debt-to-GDP ratio would surge from 98% to 125% if the bill passes. The unease about the size of the federal debt was visible at an auction of 20-year treasuries yesterday, which Reuters described as poorly received. Yields, which move inversely to bond prices, on 20-year treasuries hit the highest level since November 2023. The two-year note exceeded 4% and the US dollar weakened.

Another place where government debt is mounting is Japan. The 40-year bond yield hit 3.66%, an all-time high. At the same time, the country's core machinery orders surged by 13% month on month. This marked their highest level in nearly two decades and defied expectations of a decline.

Despite this robust growth, flash manufacturing PMI came in at 49 for May, which, if confirmed in the final reading, would be the 11th consecutive month of declines, a reading below 50 signals contraction. There is also concern about PMI trends in the Eurozone, particularly with Germany's composite PMI falling to 48.6 in May from 50.1 in April, indicating a return to contraction for the private sector after four months of modest expansion.

This decline was driven by significant downturns within both manufacturing and services amid weakening demand and customer uncertainty. PMI for the two sectors in the US is also coming out today. Phew! That was a lot to get through. Remember that if you're having any issues with your Real Vision subscription, reach out to Milton at realvision.com. Our team is working as fast as possible for a solution that addresses any issues more widely. Take care and see you tomorrow.