Weekly Market Commentary May 26th to May 30th 2025

Last week was a light week for economic news but the few releases were meaningful.

The FOMC minutes were released on Wednesday and “Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken,” the minutes said. Overall, regarding their current policy they view both economic growth and labor market as “solid”, but “uncertainty about the economic outlook has increased further” as the trade war continues.
The first revision for 1Q25 GDP was released on Wednesday and was revised higher by 0.1% to -0.2% and still a 3-year low. Overall, inventories were increased while consumption was revised lower.

Closing out the week was the Federal Reserves preferred inflation measure, Personal Consumption Expenditures (PCE) for May. Core PCE, which excludes food and energy, increased 2.5% from a year ago and was in line with estimates and the second consecutive monthly decline. Also in the release was personal spending, which rose 0.2%, 0.1% more than expected, while personal income rose 0.8% in April, considerably more than the 0.2% consensus forecast. As a result, the savings rate was 4.9% in April. Big increases in farming income and Social Security accounted for the gains.

On a holiday shortened week, equity markets continued their positive momentum after Nvidia reported strong earnings and guidance putting AI spending fears to rest for now. The S&P 500 increased to 5,911 and a 1.9% gain for the week posting the biggest monthly gain since 2023 bringing the YTD gain to 0.63%. U.S. Treasury yields declined slightly during the week after upward pressure the past few weeks with the 10-Year finishing the week at 4.40% and 2- year Treasury at 3.90%.

This upcoming week we will be jam packed with important releases, including the ISM Services and Manufacturing reports, May Non-Farm Payrolls and several FOMC Governors speaking.