Week of May 20–24 Recap | Week of May 27–31 Outlook

Markets treaded cautiously last week amid hawkish Fed minutes, signs of persistent US inflation pressures, and weak global PMIs, reinforcing concerns about global growth moderation. Equity indices pulled back slightly, UST yields rose, and the dollar remained resilient. Meanwhile, UK inflation surprised to the downside, while China and Japan posted mixed data. This week, all eyes turn to US PCE inflation, German CPI, and China PMIs, which could influence central bank outlooks heading into summer.

🌎Markets This Week – U.S. in Focus

Last Week

• FOMC minutes from the May meeting showed most participants lack confidence that inflation is sustainably moving toward 2%, with some noting willingness to hike if necessary — a hawkish tilt that surprised markets.
• Initial jobless claims fell to 215k, beating estimates and signaling continued labor market resilience.
• S&P Global PMIs (May, prelim):
  • Manufacturing rose to 50.9 (prev: 50.0)
  • Services fell to 54.8 (prev: 51.3)
  • Composite at 54.4 → expansionary, but services-led.
• Equities (S&P 500, Nasdaq) posted mild weekly losses (~-0.6%).
• UST 10Y yield rose ~13bps on the week to 4.47%, driven by hawkish Fed tone.
• USD Index (DXY) climbed back toward 105.

This Week

• Key Focus: April PCE Price Index (Fri)
  • Core PCE YoY is expected at 2.6% (prev: 2.8%) → markets will watch closely for disinflation confirmation.
• Also on the docket:
  • Durable Goods Orders (Tue)
  • CB Consumer Confidence (Tue)
  • Q1 GDP (2nd est., Thu) → revised sharply lower to -0.3%
  • Personal Income & Spending (Fri)

🇪🇺 Markets This Week – Eurozone Growth Watch

Last Week

• S&P Global Composite PMI (May, flash): dropped to 52.3 from 53.3, led by slowing services activity.
• Germany’s services sector remained strong (PMI: 53.9), but manufacturing stayed in contraction (PMI: 45.4).
• ECB speakers (Villeroy, Schnabel) continued to hint at a June rate cut despite mixed data.
• European equities retreated; Stoxx 600 fell ~0.4%.
• Bund yields rose slightly on global rate repricing.

This Week

• German CPI (Thu) → Expected at 0.4% MoM.
• Eurozone Consumer Confidence final (Tue) and Euro Area inflation flash (next week) will be watched.
• ECB enters blackout period soon ahead of June 6 meeting – markets are pricing >90% probability of a cut.

🇬🇧 Markets This Week – UK Data Turns Dovish

Last Week

• UK CPI (Apr):
  • Headline fell sharply to 2.3% YoY (prev: 3.2%)
  • Core eased to 3.9% (prev: 4.2%)
    → Sparks rate cut bets, though services inflation stayed high at 5.9%.
• Retail sales plunged -2.3% MoM in April vs -0.5% expected.
• BoE’s Bailey sounded cautious: “Not there yet” on inflation.
• GBP weakened; UK gilt yields dropped post-CPI.

This Week

• BoE speakers in focus ahead of June MPC.
• Markets now price in August cut as base case.
• Nationwide House Price Index (Thu) and mortgage approvals will give insights into housing sentiment.

🇨🇳 Markets This Week – China and Japan in Spotlight

Last Week

• PBoC kept 1Y and 5Y LPR unchanged as expected.
• Home prices fell for 10th straight month, reinforcing property sector drag.
• Industrial profits (YTD): +4.3% YoY (Apr) – a slight deceleration.
• Foreign investors remained net sellers of Chinese equities.

This Week

• May PMIs (Fri): Key to gauge whether fiscal and monetary support are gaining traction.
• Watch for any stimulus-related headlines from top leadership as June Politburo approaches.

🇯🇵 Markets This Week – China and Japan in Spotlight

Last Week

• CPI (Apr):
  • Headline: 2.5% YoY (prev: 2.7%)
  • Core-core: 2.4% (prev: 2.9%) → supports BoJ patience.
• JPY weakness continued, testing 157.5 vs USD.
• 10Y JGB yields rose to 1.00%, highest since 2012.
• Japanese equities (Nikkei) slipped ~1.2% on profit-taking.

This Week

• Tokyo CPI (Fri) will be key ahead of BoJ June meeting.
• Retail sales (Thu) and industrial production (Fri) also due.

🌍 Markets This Week – Emerging Market Risks

Last Week

• Turkey kept rates unchanged at 50%, but TRY hit record lows.
• South Africa elections (May 29) loom, with ANC possibly losing majority for first time.
• Poland and Hungary released stronger-than-expected retail sales.
• EM FX underperformed as UST yields rose.

This Week

• Turkey’s trade balance, Saudi FX reserves, and South Africa election results will be closely watched.
• EMs remain sensitive to US data and dollar moves.

🛢️ Markets This Week – Commodities and Crypto

Key Headlines

• Oil (WTI) rose back toward $78 on stronger demand outlook.
• Gold dipped below $2,340 as yields firmed.
• Copper posted its first weekly decline in six weeks amid profit-taking.
• BTC/ETH consolidated after recent gains, with low volatility.

Top Performers (Weekly):

• WTI Crude: +1.6%
• Natural Gas (US): +2.8%
• Soybeans: +3.1%
• Bitcoin: -0.9%
• Ethereum: -2.1%