MARKET COMMENTARY
Markets kicked off the shortened trading week with renewed optimism after President Trump delayed a planned 50% tariff on European imports, easing fears of an immediate trade escalation. The S&P 500 and Nasdaq posted strong gains, while Treasury yields fell and the dollar firmed amid a global bond rally. Although the tariff delay helped lift sentiment, uncertainty remains, especially around other unresolved trade threats and growing concerns over fiscal policy.
Macro data released this week added to the mixed picture. May consumer confidence rebounded to 98, reversing a five-month decline and reflecting improved sentiment following recent trade de-escalation. However, April durable goods orders fell more than expected, and core capital goods orders, a proxy for business investment, also disappointed. These readings suggest that while consumers are feeling better, businesses remain cautious.
Looking ahead, the Federal Reserve’s meeting minutes and Friday’s core PCE inflation data will be closely watched for signs of how policymakers are thinking about interest rates. Fed officials, including Minneapolis’s Neel Kashkari, have emphasized the need for patience amid uncertainty over trade policy and fiscal sustainability. Treasury markets are also in focus after a weak 20-year bond auction last week raised questions about investor demand and the impact of rising global yields, especially as Japan and Europe weigh shifts in their own debt markets.
Overall, markets are navigating a delicate balance between optimism over cooling trade tensions and ongoing concerns about inflation, interest rates, and global capital flows. While equities have rebounded, underlying macro risks remain front and center.
Economic Releases This Week
Monday: None scheduled, Memorial Day Holiday
Tuesday: Durable Goods Orders, S&P CoreLogic Case-Shiller Home Price Index, Consumer Confidence, New York Fed Speech in Tokyo
Wednesday: Minutes of Fed’s May FOMC Meeting
Thursday: Initial Jobless Claims, Q1 GDP (First Revision), Pending Home Sales, Chicago Fed Speaks, Dallas Fed Speaks
Friday: Personal Income, Consumer Spending, PCE Index, Core PCE Index, Advanced US Trade Balance in Goods, Advanced Retail Inventories, Chicago Business Barometer, Consumer Sentiment
Stories to Start the Week
The U.S. Reinforces Europe’s Northern Front, Fearing War With Russia
Universities Map Out New Investment Strategies to Deal With Tax Hike on Endowments
Japan’s Nippon Steel Expected to Close on Acquisition of US Steel
Retailers Pummeled By Trump’s Trade War Entertain More “Take Private” Offers
SpaceX Pushes to Get Starship Rocket Ready for Mars by Next Year