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Inflation expectations:
Joanne Hsu from the Univ. of Michigan says:
Consumer sentiment was unchanged from April, ending four consecutive months of plunging declines. Sentiment had ebbed at the preliminary reading for May but turned a corner in the latter half of the month following the temporary pause on some tariffs on China goods. Expected business conditions improved after mid-month, likely a consequence of the trade policy announcement. However, these positive changes were offset by declines in current personal finances stemming from stagnating incomes throughout May. Overall, consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future.
Year-ahead inflation expectations were little changed at 6.6%, inching up from 6.5% last month. This is the smallest increase since the election and marks the end of a four-month streak of extremely large jumps in short-run expectations. Notably, long-run inflation expectations fell back from 4.4% in April to 4.2% in May. This is the first decline seen since December 2024 and ends an unprecedented four-month sequence of increases. Given that consumers generally expect tariffs to pass through to consumer prices, it is no surprise that trade policy has influenced consumers’ views of the economy. In contrast, despite the many headlines about the tax and spending bill that is moving through Congress, the bill does not appear to be salient to consumers at this time.
China helped in the final readings
This article was written by Greg Michalowski at www.forexlive.com.
The major US stock indices are trading lower to start the last trading day of the week end of the month. A snapshot of the levels currently shows:
Dow Jones (DJI): 42,104.40, -111.33 (-0.26%)
S&P 500 (SPX): 5,887.38, -24.79 (-0.42%)
Nasdaq Composite (IXIC): 19,064.80, -111.07 (-0.58%)
For the trading week, the indices are up between 1% and 2%:
For the month of May:
This article was written by Greg Michalowski at www.forexlive.com.
The USD moved lower after the data that showed inflation was under control – for now. The trade data saw a big improvement. The personal income data was solid.
Not so hot is Pres. Trump tweeted that China violated the trade agreement:
Stocks are lower. Yields are near unchanged.
The USD moved lower initially, but is moving modestly higher after the initial move.
EURUSD: The EURSUD moved above the 100-hour MA at 1.13342. The high reached 1.1357. The 1.1362 and 1.13803 are tatgets. THe high today reached 1.1389.
USDJPY: The USDJPY moved away from the 100 and 200-hour MA between 144.98 and 143.85. That area will now be resistance on a rebound.
GBPUSD: The GBPUSD moved higher and away from the 200-hour MA at 1.3475, but stalled at the higher 100-hour MA at 1.3501. Earlier today, the high stalled at the 100 hour MA increases the levels importance going forward.
USDCHF: The USDCHF has solid resistance against the 100/200 hour MA and the 50% of the range since April. That area comes between 0.8252 to 0.8257. ON the downside, a swing araa floor comes between 0.8193 to 0.8212. Getting below is more bearish.
This article was written by Greg Michalowski at www.forexlive.com.
Slightly higher than expected figures but nothing that will worry the ECB for the time being.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
OPEC+ may discuss an oil output hike larger than 411,000 bpd for July. The meeting is tomorrow. Oil is of course down on the news on higher than expected output hike.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
It’s been a slow session as we just got a couple of low tier data releases and very limited newsflow. The inflation readings from Spain, Italy and Germany showed some more progress on inflation but nothing notable. The data won’t change the ECB plan of cutting rates in June.
Nonetheless, the ECB members are starting to look for a pause after the June’s reduction. Today, ECB’s Panetta, who is a dove, sounded more neutral as he said that there’s now reduced room to cut rates further given that they are now in their estimated range of neutral rates (1.75%-2.25%).
In the American session, we get the US PCE price index data, which is the Fed’s preferred inflation measure, the Canadian GDP report and the final UMich consumer sentiment. Neither of those should change much in terms of interest rates expectations, but always watch out in case we get notable deviations from the expected numbers.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
Today at 08:30 ET/12:30 GMT, we get the US April PCE price index data which is the Fed’s preferred inflation measure. This isn’t generally a strong market moving release because the data is old news given that it can be calculated pretty accurately from the CPI, PPI and import prices data.
WSJ’s FedWatcher Nick Timiraos shared on his X account the estimates from professional forecasters. The figures show another improvement in April. Again, this is already priced in, so don’t take too much out of it. Markets react more and change future expectations based on the CPI and PPI data because they are actually NEW information.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
