The week ended with markets focused entirely on the escalating tensions around Iran, as officials described key Stage. including intermediaries Pakistan, Qatar and Saudi Arabia Worked urgently to secure at least a temporary framework agreement aimed at preventing renewed US and Israeli military action. Diplomatic efforts have focused on extending the ceasefire and buying time for broader talks, but Major divisions remain – particularly on Iran’s uranium enrichment program and how quickly Tehran should make nuclear concessions in exchange for sanctions relief and a reduction in hostilities.
Reports indicate that there has only been slight progress So far, the two sides are still far apart. Iran is looking for Relief from sanctions, protection from future attacks and reopening of trade routes Before making major nuclear concessions, while the US is demanding strict nuclear restrictionsThat includes limits on the surrender of enrichment and weapons-grade materials before comprehensive relief is offered. Officials warned that if talks fail, the US and Israel may consider renewed strikesIranian economic and energy infrastructure is likely being targeted to increase pressure on Tehran. Iran responded by warning that it would retaliate against any new military action.
The geopolitical backdrop remains highly uncertain. Israel is reportedly concerned that President Trump might agree to a deal Too soft on Iran’s nuclear and missile programsWhile Prime Minister Netanyahu doubts that diplomacy will succeed. Trump has indicated that he prefers a negotiated solution but has also warned Military action remains on the table If no agreement can be reached. As a result, the market continues to react sharply to every headline related to the conversation Oil Prices, Treasury Yields, Stocks and the US Dollar Looking for extreme volatility all weekend. PS President. Trump will be in Washington over the weekend and will miss his son (Don Jr.). Wedding in Bahamas.
One is featured in the University of Michigan’s final consumer sentiment report for May. US consumer picture weaker than expected. headline index fell 48.2 to 44.8That marks the third consecutive monthly decline and is pushing sentiment near historic lows since mid-2022. High gasoline prices remain a major concern due to supply disruptions in the Strait of Hormuz 57% consumers cite rising cost of living as financial stress. Low-income families were hit hardest. Most importantly for the markets and the Fed, Inflation expectations turned high again. One year’s expectations increased 4.5% to 4.8%While five-year expectations increased 3.4% to 3.9%Concerns are growing that inflationary pressures may become more persistent. report supports Higher yields and stronger US dollar Because it reduces expectations of a Fed rate cut in the near term, it also raises concerns about future consumer spending and growth.
Fed Governor Christopher Waller reinforced this hoarse voicePushing back strongly against near-term rate cut expectations. Waller said he did not expect to support any policy changes anytime soon and warned that there were inflation risks associated with Higher energy prices and rising inflation expectations are becoming more worrying. He said the labor market is now largely balanced, allowing the Fed’s focus to shift entirely to inflation. Waller warned that the Fed’s inflation shortfall is entering into sixth year And said he would not hesitate to support a rate hike if inflation expectations spiral out of control. Although not actively calling for a hike yet, he argued that the Fed should shed its innate bias and said discussions about a rate cut are premature given current inflation pressures. He also noted Consumer spending remains resilient and there is no signal AI-driven investment boom It’s slowing down.
President Donald Trump formally swore in Kevin Wersh as the new Fed Chairman, praising him as uniquely qualified to lead the institution. nurtured freedom and the importance of maintaining strong economic growth. Trump argued this Low inflation and strong growth can co-exist And with the stock market rally pointed to as evidence, investors welcomed Warsh’s appointment.
In his remarks, Varsh took a stab at confident, improvement-oriented tonePledged to lead the Fed with “energy and purpose” while remaining faithful to its mission. He said that the coming years may bring Strong prosperity and rising living standardsemphasizing that Low inflation and strong growth can be achieved together. Warsh also indicated a desire to modernize the Fed and learn from both past mistakes and successes.
Looking ahead, traders will focus on the markets next week Inflation, central banks and geopolitical risk. The main event for America will be on Thursday Core PCE Inflation Report — the Fed’s preferred inflation gauge — as Welch begins his tenure facing high inflation expectations and persistent price pressures. Markets will also be monitored Consumer confidence, GDP revision, housing data and Fed speaker Including Auston Goolsby and John Williams. Global attention will be directed towards this RBNZ decision, BOJ comments, Japan inflation data, China PMI and Canada GDP. Geopolitical headlines remain regarding Iran key wildcardOil, yields, stocks and the US dollar continue to react sharply to every new development. Low holiday liquidity conditions at the beginning of the week may increase volatility.
Showing a snapshot of the markets at the end of the week:
- Dow Industrial Average +0.59%
- S&P Index +0.33%
- Nasdaq Index. +0.11%
For the trading week:
- Dow +2.10%
- S&P +0.83%
- NASDAQ +0.38%
In the US debt market, yields are ending mixed with a flattening yield curve as market prices rise in 2026 leading to slower growth.
- 2 years 4.123%, +3.6 basis points
- 5 years 4.256%, +0.01 basis points
- 10 years 4.558%, =2.6 basis points
- 30-year 5.064%, -4.7 basis points
For the week:
- 2-year yield rose 4.4 basis points
- 5 year yield unchanged
- 10 year yield -4.1 basis points
- 30 year yield -5.9 basis points
Looking at the USD today, it was mixed against major currencies. USD vs::
- Euro +0.10%
- JPY +0.12%
- GBP-0.08%
- CAD+0.23%
- CHF -0.245
- AUD +0.22%
- NZD +0.27%
During the week, the USD also had a mixed trend. : :
- Euro +0.15%
- JPY +0.28%
- GBP +0-.92%
- CHF -0.19%
- CAD +0.51%
- AUD +0.17%
- NZD -0.34%
In other markets:
- Crude oil is almost unchanged at $96.37 and down -4.73% this week
- Gold is down – $36 on the day and down – $34 for the day or -0.73%
- Silver fell -$1.23 on the day to $75.45 and were down -0.46% on the week.
