United States

Bank of America card data showed household spending rose 5.1% year over year in May—the strongest increase in nearly four years—with spending excluding gasoline remaining resilient at 3.9%. The month-over-month growth rate, however, has eased considerably.

Euro Area

The European Central Bank raised rates by 25 bps, in line with expectations. The Governing Council described the unanimous decision as “robust” rather than an “insurance” hike, signaling strong conviction. However, President Lagarde provided little forward guidance.

China

Iran’s oil exports to China have plunged as weaker Chinese demand, tighter US enforcement, and a naval blockade sharply curtail shipments.

Emerging Markets

Pakistan is the world’s second-largest solar panel importer.

Equities

SpaceX is selling 555.6 million shares at $135 apiece, raising $75 billion in the largest IPO on record.

Rates

The 10-year Treasury yield tracks a weighted 10-year moving average of inflation well. The chart below provides some forward paths based on different inflation scenarios.

Energy

The spot Brent-to-WTI premium has nearly completely evaporated.

United States

Inflation outstripped wage gains for a second month, implying negative real wage growth.

Canada

The Bank of Canada left its policy rate unchanged at 2.25%, with Governor Tiff Macklem citing a policy dilemma between weak economic growth and rising energy-driven inflation.

United Kingdom

Our timely growth estimate for the UK remains negative.

Equities

Bank of America’s research shows that elevated long-term earnings growth expectations have historically been associated with weaker subsequent equity returns, suggesting today’s exceptionally optimistic forecasts may leave the market vulnerable to disappointment.

Credit

Spreads on business development company (BDC) bonds have narrowed sharply from their March highs as investors, attracted by elevated yields, snap up private credit debt.

Energy

The US now leads global oil production after more than doubling output over the past decade.

Global Developments

A growing number of central banks have shifted toward tightening.

United States

The NFIB Small Business Optimism Index edged down to the lowest level since October 2024.

Euro Area

The German Weekly Activity Index slumped to the lowest level since October 2022.

China

China’s headline inflation held steady at 1.2% year over year, as a drop in food prices offset higher energy costs. Core CPI softened to 1.1% year over year, driven by weaker tourism-related services.

India

While AI has fueled a surge in EM technology stocks, India’s IT sector has been left behind.

Equities

The three-month return spread between the highest- and lowest-performing deciles in the technology sector has surged to dot-com-bubble levels.

Energy

The Brent–WTI spread has fallen below where it stood before the Iran conflict.

Global Developments

Over the past 125 years, all major paper currencies have lost nearly 100% of their value relative to gold.

United States

A Boston Fed study finds that while a 33% real oil price shock would lift PCE inflation by about 1.5 percentage points over the following year, the US economy is far less vulnerable to employment losses than in the 1970s, because lower oil dependence and increased domestic production help offset the shock’s labor market impact.

United Kingdom

Potential redundancy notices rose to the highest level since late 2020, signaling a deteriorating labor market.

Japan

Nominal average cash earnings accelerated, driven by a jump in volatile special wages while core basic wage growth held firm.

Asia-Pacific

The percentage of Kospi members at 52-week lows has surged to late-2024 levels.

Equities

The total assets held by Vanguard S&P 500 ETF (VOO) have surpassed $1 trillion.

Commodities

Metals Focus forecasts physical investment demand for gold to rise to its highest level since 2013 and surpass jewelry demand for the first time in 2026.

Global Developments

Global food prices held near a three-year high in May.

United States

The Fed’s Beige Book reported that overall economic activity increased at a “slight to moderate pace” in 10 of 12 districts and that employment remained in a “low-hire, low-fire” environment, while inflation pressures intensified. Our Beige Book diffusion indicator rose to the highest level since early 2025.

Canada

Labor productivity unexpectedly declined in Q1, as output contracted despite higher hours worked, with weakness concentrated in construction, agriculture, and forestry.

Europe

Driven by strong AI-driven demand for advanced chipmaking tools, ASML Holding has become the most valuable company in European history, surpassing the previous record set by Novo Nordisk.

Emerging Markets

The Turkish lira continues to reach new lows against the dollar, with forwards implying further weakness, reflecting the much higher interest rate in Turkey.

Equities

Low volatility stocks are roughly flat year to date, while high beta stocks have surged.

h/t Simple But Not Easy

Credit

Cliffwater’s flagship private credit fund reported even larger redemption requests than in Q1, contributing to a broad selloff in alternative asset managers.

Commodities

Urea futures have retreated, trading below levels from before the Iran conflict began.

United States

Excluding professional and business services, job openings in other industries have been stable.

United Kingdom

Mortgage approvals for house purchases rose for a fourth consecutive month. The continued strength is likely driven by households bringing forward purchases to lock in rates ahead of anticipated hikes from the Bank of England.

Euro Area

Here is a quick look at euro area inflation rates by country.

Asia-Pacific

Retail investors in South Korea have counterbalanced foreign investors’ outflows.

China

China’s RatingDog Services PMI rose to a three-month high, driven by improving new business, export orders, and hiring. However, profit margins remain under pressure as input costs hit a 19-month high while output prices were kept stable.

Equities

The spread between VIXEQ and VIX has surged to a record high.

Rates

The entire increase in 30-year nominal yield since 2022 has been driven by real yield.

h/t Barclays Research

United States

Capital goods imports continued to surge as businesses ramped up purchases of AI-related hardware.

Euro Area

Germany’s labor report showed unexpected strength in May, as the number of unemployed persons fell after rising for six months, defying expectations for a further increase.

Japan

Japan confirmed its first yen-buying intervention since 2024, spending a record ¥11.73 trillion ($73.6 billion) between April 28 and May 27 to slow the currency’s slide.

China

China’s official NBS Manufacturing PMI edged down to 50 and signaled that manufacturing activity stalled.

Equities

Software stocks posted the strongest month since 2001, as strong earnings and AI-driven demand eased fears that artificial intelligence would disrupt the sector’s growth prospects.

Commodities

Here is a snapshot of price trends across individual commodities.

Global Developments

Global semiconductor sales have gone parabolic.

United States

With income growth flattening out, consumers dipped into savings to maintain consumption. The savings rate fell to secularly low levels, limiting further support for household spending.

Japan

Tokyo’s inflation decelerated, attributed to a temporary policy factor—an earlier-than-expected start to a free water charge program.

Asia-Pacific

Korea’s National Pension Service raised its domestic equity allocation target to 20.8% from 14.9%. This sharply reduces the need for forced domestic equity selling and implies that rebalancing flows will increasingly favor domestic bonds and overseas assets through 2027.

Emerging Markets

Actively managed emerging-markets ETFs are gaining traction as asset managers seek alternatives to increasingly AI- and tech-concentrated benchmark indexes.

Equities

Implied correlation for members of the S&P 500 Index has fallen to record-low levels.

Rates

Short-term rate expectations remain a significant driver of longer-term bond yields.

Energy

Including stock in the Strategic Petroleum Reserve (SPR), US crude oil inventories have fallen to the lowest level since January 2025.

United States

Refinancing activity fell to the lowest level in nearly a year.

United Kingdom

The 10-year gilt yield fell for eight consecutive days, the longest streak since late 2023.

Japan

These charts show a longer-term view for both the nominal and inflation-adjusted FX rates—the trade-weighted real JPY is trading at the lowest level since 1971.

Emerging Markets

Brazilian inflation-linked bonds offer much higher real yields than those of other emerging markets.

Equities

The share of technology and adjacent sectors has grown to 58% of the S&P 500, while it is just 28% of the S&P 600.

Rates

The 10-year bond yields 20 years forward between the US and Japan have largely converged.

h/t III Capital Management

Commodities

Gold fell below its long-term support.

United States

The nearly $160 billion of IEEPA tariff refunds are being disbursed rapidly, with almost $20 billion already paid out.

Asia-Pacific

The Reserve Bank of New Zealand held its Official Cash Rate at 2.25%, in line with expectations. The decision was a narrow 3-3 vote, with the governor’s casting vote maintaining the status quo. The accompanying guidance was hawkish, with the central bank signaling that rate hikes are “likely” in upcoming meetings and sharply raising its rate forecast path through 2026, citing persistent inflation risks despite a weaker growth outlook.

China

China’s crude oil imports are on track to hit a decade low in May.

Equities

Trailing three-month stock-bond correlation has reached multi-decade highs.

Credit

Nvidia’s 5-year CDS trades below the US sovereign CDS, highlighting the company’s exceptional credit quality.

Commodities

Aluminum on the London Metal Exchange is trading at its steepest premium to Shanghai futures since March 2022.

Food for Thought

There’s evidence that AI is unlocking a rise in “solopreneurship.”

United States

The University of Michigan consumer sentiment index was revised downward to a new record low.

United Kingdom

The UK had the fastest growth among G7 countries in Q1.

Euro Area

Germany’s ifo Business Climate Index stabilized, supported by gains in both the current conditions and expectations components.

Asia-Pacific

Taiwan’s stock market capitalization rose to $4.95 trillion, surpassing India’s to become the world’s fifth-largest equity market, driven by a rally in Taiwan Semiconductor Manufacturing Co. amid investor enthusiasm for AI and semiconductor-related stocks.

China

Utilized foreign direct investment contracted further in April.

Equities

The ratio of the equal-weighted consumer discretionary index to the S&P 500 has fallen below the lows seen during the global financial crisis.

Commodities

Data from a World Gold Council and YouGov survey shows a record 95% of central bank representatives expect global gold reserves to increase over the next year.

The Atlanta Fed’s GDPNow model is tracking Q2 GDP at 4.3%.

Canada

Small-business confidence deteriorated sharply in May.

United Kingdom

The CBI’s gauge of industrial orders worsened in May, falling to its lowest level since September 2020.

Euro Area

Consumer confidence in the euro area improved modestly in May, likely aided by fuel duty cuts. However, sentiment remains depressed by geopolitical tensions and slowing real income growth, pointing to subdued consumer spending and downside risks to the consumption outlook.

Emerging Markets

The Borsa Istanbul 100 Index fell below its 100-day moving average.

Equities

The three-month correlation between energy and the S&P 500 has reached its most negative level on record.

Rates

The Fed’s Treasury holdings have risen in absolute terms but stand below the pre-GFC average as a share of the overall market.

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