Oil pullback offers relief, but macro uncertainty remains

Summary

Last week in markets

Global markets ended the week balancing resilient risk appetite against renewed uncertainty around growth and monetary policy. The S&P 500 gained 0.91% on a total return basis, marking its eighth consecutive weekly advance, despite a shortened trading session ahead of Memorial Day weekend. Treasury markets experienced volatility following mixed economic data, though the 10-year Treasury yield ultimately declined from 4.61% to 4.56% as investors monitored renewed negotiations involving the U.S., Iran, and several countries in the Middle East.

Brent crude fell nearly $10 per barrel during the week, settling near $100 per barrel. Oil futures extended losses over the long weekend, reaching their lowest levels since mid-April as optimism around potential U.S.-Iran negotiations eased near-term supply concerns. Markets also absorbed the release of the Federal Reserve’s latest meeting minutes, which showed a growing willingness among policymakers to consider additional rate hikes if inflation persists. The minutes reinforced the market’s continued shift away from expecting near-term rate cuts and toward a higher-for-longer policy environment.

Over the weekend, peace talks involving Iran failed to produce a meaningful breakthrough, reinforcing skepticism around the likelihood of a durable agreement in the near term. As a result, geopolitical risk premiums remain embedded across commodity markets.

The week ahead

This week will place economic data and consumer activity at the center of market attention as investors evaluate whether growth momentum can remain resilient amid restrictive monetary policy.

On Tuesday, the Conference Board’s Consumer Confidence Index is expected to register 92.0, slightly below the prior month’s 92.8 reading. While the anticipated decline is modest, markets will monitor whether elevated borrowing costs and persistent inflation pressures are beginning to weigh more heavily on household sentiment and discretionary spending.

Attention will then shift to a heavy slate of U.S. macroeconomic releases later in the week. Durable Goods Orders are expected to rise 2.8%, accelerating from the prior 0.8% increase and signaling continued resilience in business investment activity. Preliminary GDP is expected to come in at 2.1%, slightly above the previous 2.0% reading, reinforcing the view that economic activity remains firm despite tighter financial conditions.

Weekly Jobless Claims are forecast at 213,000 compared with the prior 209,000, with investors watching for signs of gradual labor market softening. Personal Income and Outlays are expected to increase 0.4% following the prior 0.6% gain, offering additional insight into the trajectory of wage growth and consumer spending.

Housing and trade data will also remain in focus. New Home Sales are expected at 662,000 versus the prior 682,000, reflecting continued affordability pressures tied to elevated mortgage rates. Meanwhile, the U.S. International Trade in Goods Advance report is expected to show a trade deficit of $88.4 billion compared with the prior $87.9 billion deficit.

Collectively, the upcoming data calendar will provide investors with a broader view of consumer resilience, business investment, labor market stability, and external demand. Each remains central to the market’s evolving outlook for Federal Reserve policy and broader financial conditions.