Global Highlights for This Week : US PCE Report Takes Center Stage ; Earnings Season Winds Down
Despite persistent macroeconomic headwinds from firming inflation and climbing Treasury yields, the three major US indices posted uniform gains last week, with the S&P 500 logging its eighth consecutive weekly advance.
Strong corporate earnings have allowed market participants to look past rising yields, volatile crude prices, and geopolitical tensions in the Middle East.
However, with the first-quarter reporting cycle effectively wrapping up, macro indicators are set to regain the central focus on trading desks.
Sticky inflation data continues to challenge fixed-income markets. Observers warn that if yields remain elevated for an extended period, it could introduce a definitive valuation ceiling for equities moving forward.
This Thursday, the Bureau of Economic Analysis will release the April Personal Income and Outlays report, featuring the core Personal Consumption Expenditures (PCE) price index—the Federal Reserve's preferred inflation metric.
Following hotter-than-expected CPI and PPI prints released two weeks ago, the upcoming PCE data is widely expected to further signal how elevated energy costs and supply chain disruptions are feeding back into structural inflation.
Rekindled inflation anxieties are altering institutional interest rate paths. Futures markets have begun pricing in the outside probability of a Fed rate hike later this year—a stark reversal from early-year bets that assumed a continuation of the central bank's easing cycle.
Minutes from the Fed's April monetary policy meeting released last week confirmed this hawkish shift, revealing that a majority of officials emphasized the appropriateness of tightening policy further if inflation tracks persistently above the 2% target.
On the corporate front, the Q1 reporting cycle is entering its final innings, with over 90% of S&P 500 constituents having disclosed results. Data from LSEG IBES points to a massive 29% year-over-year surge in aggregate first-quarter earnings.
Market expectations for both corporate earnings and structural economic growth remain heavily front-loaded and largely priced into current equity valuations.
This week, major retailers including Costco, Best Buy, and Dollar Tree are scheduled to report. Investors will look closely at these prints to gauge whether elevated fuel prices are beginning to cannibalize broader discretionary consumer spending.
Artificial intelligence also remains a core thematic focal point, with Salesforce and Dell Technologies slated to report earnings.
While Nvidia shares cooled slightly following its block-buster beat-and-raise print last week, the tech bellwether’s execution fueled sharp rallies across its partner ecosystem.
Nvidia's financial disclosures have further reinforced institutional confidence that secular, AI-driven capital expenditure pipelines remain exceptionally robust.
Key Global Economic Calendar:
Monday: US and UK markets closed for Memorial Day and Spring Bank Holiday.
Tuesday: US FHFA House Price Index (March), Conference Board Consumer Confidence (May), Dallas Fed Texas Business Activity Index (May).
Wednesday: BOJ Governor Kazuo Ueda speech, RBNZ Interest Rate Decision, US ADP Employment Change, Richmond Fed Manufacturing Index (May).
Thursday: BOK Interest Rate Decision, Eurozone Industrial Sentiment (May), ECB April Meeting Minutes, US Core PCE Price Index (April), US Q1 GDP (Second Estimate), NY Fed President Williams and St. Louis Fed President Musalem speak.
Friday: Japan Tokyo Core CPI (May), BOE Governor Andrew Bailey speech, Kansas City Fed President Schmid and Fed Governor Bowman speak, US Chicago PMI (May).