Daily Market Outlook, May 29, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Record Stocks, Fragile Spending

Global equities are ending the week at fresh highs as the market embraces a tentative US-Iran ceasefire deal and another powerful leg higher in technology stocks. The MSCI All Country World Index rose 0.4% to a record, while Asian equities surged 2% to an all-time peak, helped by renewed optimism that lower Middle East tensions will reduce the energy shock and support global growth. Europe is set to open higher, and the S&P 500 is on track for a ninth consecutive weekly gain, a streak seen only four times since 1985. Oil is driving the macro relief. Brent fell 1.2% to $92.60/bbl after reports of a proposed 60-day ceasefire extension and continued negotiations over Iran’s nuclear programme, pending President Trump’s approval. Brent is now down more than 18% this month, which would be its biggest monthly decline since March 2020. That move is central to the equity rally because it eases the immediate inflation scare, improves the real-income outlook and lowers the risk that central banks are forced into further tightening. But the deal is still tentative, and the market has already learned several times this month that the peace premium can reverse quickly. Technology remains the other major support. SpaceX has reportedly lifted its IPO valuation target to at least $1.8tn, while Dell surged nearly 40% after-hours on a stronger sales outlook. The AI infrastructure theme is still broadening beyond the most obvious semiconductor winners and into hardware, servers, data-centre supply chains and private-market valuations. That is keeping global equity momentum powerful even as parts of the macro data look less convincing.

Rates and FX are more restrained. Treasuries held Thursday’s gains, with the 10yr yield steady around 4.44%, while the Dollar was little changed after its previous decline. The Dollar’s rally earlier this month was driven by expectations of higher US rates, but after the fall in oil and a mild downside surprise in PCE, strategists are becoming more cautious about chasing it further. Dollar-yen remains near 159.30 after Tokyo inflation unexpectedly eased for a sixth consecutive month, keeping intervention risk alive while making the BoJ’s normalisation path more difficult. Gold is around $4,500/oz and on track for a third straight monthly decline, its longest losing streak since October 2022, as the combination of stronger risk appetite and a less acute geopolitical bid weighs on demand.

The April PCE report was mildly better than expected, but not a true disinflationary breakthrough. Headline PCE rose 0.40% m/m, below the 0.5% median forecast, lifting the annual rate to 3.77% from 3.53%. Core printed 0.24% m/m versus a 0.3% survey estimate, pushing the annual rate to 3.29% from 3.24%. The softer core print was partly a rounding story rather than a material downside surprise. Energy’s imprint was obvious on goods, while services looked cooler. But part of that services cooling came from a drop in financial services fees linked to lagged market movements, a factor likely to reverse in May given the rebound in asset prices.The more important part of the PCE report was income and spending. Consumer spending rose another 0.5% m/m, confirming that household demand remains resilient. Some of that strength was gasoline-related, but there was little evidence of offsetting weakness elsewhere in the basket. That suggests consumers are still treating the energy shock as temporary. The problem is that incomes did not keep up. Personal income was flat on the month, well below the 0.4% consensus, and the savings rate fell again to a very thin 2.3% from 2.6% of disposable income. With the wage share still declining, and lower-income households bearing the larger burden of inflation, the spending picture looks increasingly dependent on households running down buffers.That is the key vulnerability beneath the market rally. If oil continues to fall and the ceasefire holds, consumers may find themselves vindicated in smoothing through a short-term shock. Sentiment and real spending could recover as energy costs ease. But if the agreement fails or inflation pressures re-accelerate, the low savings rate leaves households with less room to absorb another hit. In that case, what looks like resilience today could become demand weakness later.

The labour-market debate also requires nuance. Concerns that AI is already taking entry-level jobs are understandable, especially because AI tools can substitute for some routine junior tasks. New-entrant unemployment has risen, and graduate hiring has clearly softened. But the evidence still points more to a cyclical hiring slowdown than a structural AI displacement shock. Firms are operating in the “low-hire, low-fire” environment that central banks have repeatedly described: payroll growth is subdued, hiring is cautious, but layoffs remain contained and unemployment insurance claims are still historically low. That distinction matters. In softer cycles, firms usually defer junior hiring before cutting existing staff, so recent graduates and first-time job seekers accumulate in unemployment. AI may raise the productivity threshold for new junior headcount at the margin, but the magnitude of the current move still looks consistent with past episodes of weak hiring rather than a clear structural break. Historically, new-entrant unemployment normalises quickly once hiring improves. The risk is that AI makes that normalisation slower this time, but the data do not yet prove that it has permanently closed the entry ramp.

Markets are celebrating the best possible combination — falling oil, tentative peace and accelerating AI capex. That is a powerful mix for equities and explains the record highs. But the PCE details warn that the US consumer is leaning more on savings to maintain spending, while the labour market remains in a low-hire regime. If the ceasefire holds, the rally can extend. Should it fail, the thin household buffer and still-high core inflation will quickly matter.

Overnight Headlines

• Tokyo Inflation Slows Again, Vexing Path To BoJ Rate Hike

• RBNZ’s Gourley Says Rates Likely To Rise Sooner Rather Than Later

• Japan Can Step Into FX Market If Volatility, Katayama Reiterates

• China Export Prices Climb Most In Three Years On Oil Shock

• Washington Nearing Deal To Extend Iran Ceasefire, US Officials Say

• Vance Says US And Iran Are “Very Close” To A Deal

• Inflation-Wary Investors Pour Into Short-Dated Bond Funds

• Oil Edges Lower At Open On Tentative Deal To Extend Iran Truce

• UK Business Sentiment Edges Up In May, Lloyds Says 

• SpaceX Lowers IPO Valuation Target To At Least $1.8T

• Apollo Shops $36B Debt Deal To Buy Google Chips For Anthropic

• Dell Boosts Outlook To $60B In AI Server Sales This Year

• US Postal Service Pauses Discretionary Spending To Preserve Cash

• China’s Innovent Biologics Signs $10.5B Drug Deal With Pfizer

• Hegseth Lands In Singapore For Talks Ahead Of Asia Defense Forum

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1505 (EU1.61b), 1.1650 (EU1.44b), 1.1600 (EU1.14b)

• USD/JPY: 163.00 ($786.4m), 160.00 ($762.3m), 158.30 ($700m)

• USD/BRL: 5.1000 ($2.46b), 4.9000 ($2.21b), 5.0000 ($1.52b)

• AUD/USD: 0.7120 (AUD1.1b), 0.7100 (AUD673.4m), 0.7050 (AUD651.6m)

• USD/CNY: 6.7500 ($750m), 6.7750 ($600m), 6.7600 ($600m)

• USD/CAD: 1.3900 ($542.9m), 1.3630 ($434.1m), 1.3620 ($339.7m)

• GBP/USD: 1.3480 (GBP476m), 1.3400 (GBP360m)

• USD/MXN: 17.50 ($315.2m), 17.30 ($301m)

• EUR/GBP: 0.8780 (EU446m), 0.8755 (EU326.7m), 0.8800 (EU325m)

• USD/KRW: 1525.00 ($318.2m)

CFTC Positions as of May 22, 2026: 

• Speculators are making some notable moves in the futures market! They've reduced their net short position in CBOT US 5-year Treasury futures by 11,629 contracts, bringing the total down to 1,350,516. Meanwhile, there's been an increase in the net short position for CBOT US 10-year Treasury futures, which has risen by 66,885 contracts to hit 848,052.Speculators have also trimmed their net short position in CBOT US 2-year Treasury futures by 41,775 contracts, now sitting at 1,560,837. However, the CBOT US UltraBond Treasury futures saw an uptick in net short positions by 15,470 contracts, reaching a total of 254,464. Similarly, net short positions for CBOT US Treasury bonds futures increased by 5,820 contracts to reach 178,674.

• In the equity markets, equity fund speculators have reduced their net short position in the S&P 500 CME by 34,200 contracts, bringing it down to 384,136. At the same time, equity fund managers have cut their net long position in the S&P 500 CME by 50,929 contracts to a total of 1,005,526.

• Bitcoin's net long position stands at 2,112 contracts. Meanwhile, the Swiss franc has a net short position of -36,937 contracts, and the British pound is not far behind with a net short position of -64,307 contracts. The euro is holding strong with a net long position of 33,513 contracts, while the Japanese yen finds itself with a significant net short position of -93,905 contracts. 

Technical & Trade Views

SP500

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 7495 Target 7630

• Below 7400 Target 7330

DXY

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 98.50 Target 99.50

• Below 98.20 Target 96.12

EURUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 1.1710 Target 1.18

• Below 1.1680 Target 1.1550

GBPUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.3445 Target 1.3525

• Below 1.34 Target 1.3350

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 160 Target 161

• Below 159.50 Target 157.50

XAUUSD

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 4700 Target 4800

• Below 4500 Target 4386

BTCUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 75k Target 80k

• Below 74k Target 71k