Weekly Macro Report, May 31 2026

The S&P 500 is up 28.2% over the past 12 months, signaling strong momentum. U.S. GDP grew 1.6% in Q1 2026, while the Fed funds effective rate is 4.33% as of April 28, 2025; markets also see fewer cuts later in 2026. That mix points to growth that is still positive but below trend, with employment supported and inflation still restrictive enough to keep policy tight near term.

The labor market remains resilient but no longer strong: initial claims were 215,000 in the week ended May 23, 2026, while the April 2026 unemployment rate held at 4.3% and payrolls rose 115,000, with the prior month revised lower. That mix points to slower hiring without a surge in layoffs, keeping the Fed cautious; it supports holding rates near 4.25%–4.50% rather than cutting immediately.

As of May 29–30, 2026, the 10-year Treasury yield held around 4.45%, A-rated corporate yields were 4.98%–5.01% on May 27, and the 30-year mortgage rate was 6.51%–6.56% on May 30. That mix keeps government borrowing costs contained, leaves businesses facing still-firm credit costs, and keeps homebuying expensive for households and investors focused on carry and yield.

As of May 2026, the bond market still prices firmer growth than recession: the US yield curve remains positive, and 10-year TIPS real yields are elevated, both consistent with resilient real activity. US credit spreads are tight, pointing to solid investor risk appetite.

As of April 2026, U.S. headline CPI ran 3.8% y/y and core CPI 2.8% y/y, with monthly gains of 0.6% and 0.4%; energy drove the headline jump, while shelter, transportation services, and apparel pushed core higher. PPI is unavailable here, but the latest 10-year breakeven was 2.39% on May 28, 2026, implying TIPS-priced inflation expectations still sit below current CPI and near prior global norms.

M2 rose 4.72% y/y in Apr 2026, while CPI inflation was 3.8% y/y in Apr 2026. Liquidity is growing faster than prices but not by much, so conditions look mildly inflationary rather than truly restrictive or strongly accommodative. The main M2 drivers are higher bank deposits and small-denomination time deposits, which lifted U.S. M2 to $22.8045T in Apr 2026, up from $22.6864T in Mar.

May 2026 consumer sentiment is under clear strain: the University of Michigan current reading fell to 45.8 and expectations to 44.1, leaving a narrow spread of -1.7. That gap is consistent with a cautious yield curve backdrop, as both point to weaker confidence in the months ahead. The message is blunt: households are focused on job security and debt costs, while bond markets are still pricing slower growth and policy risk.

In June 2025, home prices were nearly flat, with Realtor.com’s national median list price at $440,950, up just 0.2% year over year. Sales were weaker, with new-home sales down 13.7% in May and inventory up 28.9% to 1.08 million active listings, while mortgage rates remained near 6%, keeping affordability strained. This mix points to a market tilting toward buyers on supply, but not enough to restore affordability.

As of late May 2026, Technology is the clear leader, with semiconductors, AI, and mega-cap names like NVIDIA, Apple, Microsoft, and Broadcom driving the move. Consumer Staples is the main laggard, pressured by stretched valuations and a weaker earnings outlook, while Utilities, Real Estate, and Health Care remain defensively supported. Energy and Financials have been more cyclical and headline-driven, but the sector gap still favors growth over defense.

As of late May 2026, U.S. equity valuations remain stretched: S&P 500 PE is 27.4, Shiller PE is 41.3, and the Buffett Indicator is 219% versus GDP. The premium to global peers is driven mainly by U.S. mega-cap tech dominance, stronger earnings growth, and deeper capital-market liquidity, while Europe and Japan still trade on lower cyclically adjusted multiples and weaker growth expectations.

As of May 28, 2026, VIX stood at 15.74, down 3.38% from the prior market day and well below 19.31 a year earlier, signaling a calmer volatility backdrop.[7] Recent factor leadership remains tilted toward Momentum and Growth, while Quality and Minimum Volatility continue to lag the more cyclical, risk-on mix. That profile points to a market still rewarding higher beta and factor dispersion rather than defensive positioning.

Japan, the UK, and the US best capture the recent rotation: by February 2026, Japan’s TOPIX jumped 9.3% in yen terms and 10.5% in USD, while the UK’s FTSE All-Share rose 6.5% and the MSCI World gained just 0.8%. U.S. large caps lagged, with the S&P 500 down 0.8% to -0.9% in February, while value outpaced growth, signaling a shift away from mega-cap tech toward broader, cheaper cyclicals.

Gold rose 0.97% to $4,538.30 and silver slipped 0.51% to $75.15, both near record levels on May 31, 2026. The move reflects persistent safe-haven buying, with 2025’s record highs and ongoing geopolitical and economic uncertainty keeping investment demand firm.[11][3] Copper and zinc remained supported by electrification demand; copper led base metals at 44.79% market share in 2025, while zinc is forecast to grow 5.47% CAGR through 2031 on galvanizing demand for renewable-energy towers and grid pylons.[2][6]

Bitcoin is at $73,918 on May 31, 2026, with Ethereum around $2,019–$2,025, keeping BTC as the market’s clear leader while ETH remains far below its 2025 peak. Bitcoin’s market cap is about $1.48T, and BTC dominance near 57%–65% signals capital is still concentrated in larger, more liquid assets. Fundamentals remain Bitcoin-led: institutional interest is supporting dominance, while altcoins lag and Ethereum has underperformed versus its all-time high.

The USD was broadly range-bound into the latest week, while EUR, GBP, JPY, CHF, AUD, CAD and NZD moved mainly on rate-differential and risk sentiment; CNH remained a key trade barometer. Dollar strength typically tightens global financial conditions, while firmer EUR/JPY/CHF can pull capital toward Europe and Japan, and weaker commodity FX can pressure inflation and delay cuts.

As of Q4 2025, U.S. federal debt was 122.6% of GDP and household debt was 68.5% in Q2 2025; both remain above Canada’s 101% and 100.2%, while household debt is below Switzerland’s 121.9% and Australia’s 113.2%. The key risk is interest-cost drift: with high leverage and still-elevated rates, debt service can crowd out fiscal flexibility and pressure valuations, pushing policymakers toward tighter budget discipline and investors toward greater duration selectivity.

In the month ahead, the June 10 CPI and June 28 GDP second release will be pivotal: a hotter CPI or firmer GDP would keep the Fed cautious and support higher-for-longer rates. June 5 JOLTS and June 7 Employment Situation, including the Unemployment Rate, will show whether labor demand is still strong enough to delay cuts. Weekly Initial Jobless Claims on June 4, 11, 18, and 25 will be the fastest read on whether labor-market stress is building.