Market Musings 5/27/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Markets surge on expectations for an imminent EU #Tariffs trade deal along with strong May #ConsumerConfidence.
After last week’s pullback, markets are off to the races again with the S&P 500 surging 2% to start the week.
So what’s driving the optimism?
First, over the weekend, the White House walked back its 50% EU #Tariffs threat. It appears a weekend call with EU leaders has put the negotiations back on track. The White House will delay the 50% deadline from June 1st to July 9th－essentially pushing back to the original 90-day #Tariffs delay deadline.
However, investors are likely more excited with the EU saying they’re ready to definitively make a deal. Market optimism is back with expectations for a deal to be announced in the next month.
Second, May #ConsumerConfidence sharply rose 15% M/M－well-above expectations to be flat. Preliminary consumer sentiment mid-month signaled a decline, but it seems the China #Tariffs delay was the catalyst to reinvigorate consumers’ view on the near-term outlook. We’ll get another look with the final consumer sentiment data on Friday.
All-in-all, this is a positive development for the market. As we’ve been saying, #Tariffs deals need to be made quickly before the uncertainty tanks the economy. To be fair, consumer data tends to be fickle, but if #ConsumerConfidence is rebounding that could help consumer spending remain resilient as supply chains and businesses adjust to initial #Inflation price increases.
However, we do still see #Tariffs announcements and talk sans an actual deal more as noise at this point. We need to see actual deals to gauge actual impact to #Inflation－which there still likely will be due to the US’s insistence on maintaining the 10% universal #Tariffs.
We continue to view macro data trends as the best signal at this point to track where the economy is likely headed. The strong #ConsumerConfidence data was a plus. Let’s see if that translation into more consumer spending.
Again, #ConsumerConfidence data is fickle and trends based on the latest news and consumers still haven’t really seen the impact of #Inflation price increases yet. We’ll see if the Consumer Sentiment data shows just as strong of a rebound on Friday.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.