Market Beats | DeepSeek Upgrades R1 Model; Honor Develops Humanoid Robots in AI Expansion Strategy; US Mortgage Refinancing Slips to Three-Month Low; Top US Universities Raise Over $4 Billion in Debt; Private Equity Fundraising Plunges 35%; Elon Musk Criticizes Trump Tax Bill

—— DeepSeek Upgrades R1 Model; Honor Develops Humanoid Robots in AI Expansion Strategy; US Mortgage Refinancing Slips to Three-Month Low; Top US Universities Raise Over $4 Billion in Debt; Private Equity Fundraising Plunges 35%; Elon Musk Criticizes Trump Tax Bill

1. DeepSeek Upgrades R1 Model

Chinese startup DeepSeek said it has completed a “minor trial upgrade” of its R1 artificial intelligence model and is inviting users to begin testing it, according to a company representative’s post in an official WeChat group on Wednesday.

The Hangzhou-based company stunned the global tech industry in January when it introduced R1, a model that outperformed Western rivals on several standardized benchmarks — reportedly at a cost of just a few million dollars. The debut triggered a rout in global tech stocks, as investors questioned whether heavy AI investments remained justified.

The launch of R1 also sparked a wave of local AI model announcements across China. DeepSeek’s founder, Liang Wenfeng, quickly became a symbolic figure of the country’s rising competitiveness in challenging Silicon Valley’s dominance.

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2. Honor Develops Humanoid Robots in AI Expansion Strategy

Honor Device Co., the smartphone maker spun off from Huawei Technologies Co., is developing humanoid robots as part of its broader expansion into China’s competitive artificial intelligence sector.

The Shenzhen-based company said on Wednesday that its new business opportunities department has decided to further invest in robotics, including the development of human-shaped machines. In March, Honor unveiled a $10 billion initiative to move into emerging industries with a strong focus on AI and innovative applications.

China is at the forefront of humanoid robotics, with several promising startups making headlines recently. Last month, Beijing hosted a robot half-marathon, which only a few of the 21 entries managed to complete. Nvidia CEO Jensen Huang has said the sector could become a trillion-dollar industry, especially in factories and warehouses designed for human labor.

Honor’s move into robotics mirrors efforts by peers like Xiaomi Corp., which has ventured into electric vehicles and smart manufacturing.

Like rivals Oppo and Vivo, Honor is also building its own agentic AI services to integrate into its smartphones and other device software platforms.

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3. US Mortgage Refinancing Slips to Three-Month Low

US home-refinance applications fell to a three-month low last week as mortgage rates approached 7%.

The Mortgage Bankers Association’s refinancing index dropped 7.1% to 634.1 in the week ending May 23. The contract rate on a 30-year mortgage rose by 6 basis points to 6.98%, while the rate on five-year adjustable-rate mortgages climbed to the highest level since January, according to data released Wednesday.

Although the group’s index of applications for home purchases rose 2.7% last week, overall demand has cooled since early April when borrowing costs dipped to a nearly six-month low. Ongoing affordability challenges are keeping many would-be buyers on the sidelines, while builders are offering more incentives to attract interest.

At the same time, rising housing inventory in many regions is beginning to slow the pace of home-price appreciation.

Mortgage rates tend to track movements in Treasury yields, which have risen steadily since early April. Last week, the yield on the 10-year note reached its highest level since February amid concerns that tax legislation moving through Congress will significantly widen the US fiscal deficit.

The MBA’s weekly survey, in place since 1990, draws responses from mortgage bankers, commercial banks, and thrifts, and covers more than 75% of all US retail residential mortgage applications.

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4. Top US Universities Raise Over $4 Billion in Debt

Lord Abbett & Co. has incurred more than $60 million in losses on a commercial mortgage-backed security (CMBS) linked to an office complex in suburban Kansas City, underscoring the ongoing distress in the market for older office buildings.

The asset manager held the majority of a $233 million CMBS backed by a mortgage on the Aspiria office campus — the former headquarters of Sprint Corp. — and was hit hard after the loan behind the bond was sold at a deep discount.

According to the latest monthly remittance report, the most junior tranche of the CMBS deal, with a face value of more than $65 million, was entirely wiped out earlier this month, with only $164 million recovered from the loan sale. As a result, bondholders also missed out on millions in interest payments.

This marks yet another setback for investors in single-asset, single-borrower (SASB) CMBS deals backed by aging office properties — a niche but high-risk corner of the real estate credit market that remains under pressure post-pandemic.

In December, holders of a $350 million CMBS tied to the Gas Company Tower in Los Angeles suffered nearly 50% losses, even on bonds that once held investment-grade ratings.

A representative for Lord Abbett declined to comment. Gary Oborny, CEO of Occidental Management, which manages and leases the Aspiria property, said in a statement that the company remains “focused on current and future leasing and development opportunities.”

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5. Private Equity Fundraising Plunges 35%

Private equity firms have seen a steep drop in fundraising this year, highlighting the industry’s struggle with sluggish deal activity, weak IPO markets, and capital return challenges in a high-interest-rate environment.

Global PE fundraising plummeted 35% to $116 billion in the first quarter of 2025, compared to the same period in 2024, according to Pitchbook. The data provider said the decline “positions the annualized fundraising total to fall below 2024 levels” of $531 billion — which was already below historical norms.

While 2024 saw a rebound in exits, allowing funds to raise capital more efficiently, that trend could reverse “if macroeconomic volatility creates a risk-off sentiment that slows exit activity once more,” Pitchbook analyst Jinny Choi noted in the report.

The data underscores broader uncertainty facing the industry as investors reassess the impact of President Donald Trump’s tariff policies. Moody’s Ratings warned last month that PE sponsors are likely to struggle with supporting and exiting portfolio companies as trade tensions erode business confidence and delay investment.

Many leveraged buyouts from 2021–2022 — struck at lower interest rates and higher valuations — are now facing cash flow pressure, exacerbating the challenges.

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6. Elon Musk Criticizes Trump Tax Bill

Elon Musk voiced disappointment with President Donald Trump’s sweeping tax bill, arguing it undermines ongoing efforts to cut government spending.

In an interview with CBS News, the Tesla and SpaceX CEO said he was stepping back from the Department of Government Efficiency (DOGE), a group aligned with Trump’s second-term agenda. “I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing,” Musk said.

The tax legislation, dubbed by Trump as his “big, beautiful bill,” narrowly passed the House last week and now heads to the Senate. It includes broad tax cuts and reductions in social spending, but concerns are growing over its potential to inflate the federal deficit.

Some GOP members oppose even the current cuts, objecting to provisions such as restrictions on Medicaid and the removal of clean-energy tax incentives.

“A bill can be big, or it can be beautiful,” Musk said in a clip aired Tuesday ahead of a full CBS Sunday Morning interview. “But I don’t know if it can be both. My personal opinion.”

“We are so far away from an acceptable bill, it’s hard to say,” said Senator Ron Johnson, a Wisconsin Republican.

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7. Federal Reserve to Cut Workforce by 10%

The Federal Reserve plans to reduce its workforce by approximately 10% over the next couple of years, largely through attrition and a voluntary deferred resignation program offered to retirement-eligible employees.

Fed Chair Jerome Powell announced the initiative in a memo to staff, stating that the move aims to modernize operations and ensure the central bank remains appropriately sized to meet its statutory mission.

“I have directed the leadership of the Federal Reserve, here at the Board and across the System, to find incremental ways to consolidate functions where appropriate, modernize some business practices and ensure that we are right-sized and able to meet our statutory mission,” Powell said.

The voluntary deferred resignation program will be available to Board of Governors staff who are fully eligible to retire by December 31, 2027, similar to a program the Fed used in 1997.

As of 2023, the Fed reported 23,950 employees across its system. The 2024 budget had anticipated increasing staff to 24,553 — a 2.5% rise — making this a sharp reversal in hiring trajectory.

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