Spot gold falls below $3,290/oz as U.S. Consumer Confidence rises to 98 in May

Economic

Summary:

Gold fell below $3,290/oz as U.S. consumer confidence rose sharply in May, driven by improved expectations across income and political groups, despite ongoing concerns about tariffs and inflation.

Gold prices fell to fresh session lows after the latest data showed U.S. consumer sentiment improving further than expected this month.

The Consumer Confidence Index rose to 98 in May, well above economists’ consensus forecast for an 87 reading and also below the downwardly revised 85.7 print in April, the Conference Board said on Tuesday.

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, rose 4.8 points to 135.9 in May, while the Expectations Index, representing consumers’ short-term outlook for income, business, and labor market conditions, surged 17.4 points to 72.8, but remained well below the threshold of 80 which typically signals a recession ahead.

Gold prices fell to session lows following the 10 am EDT data release, with spot gold last trading at $3,297.15 per ounce at the time of writing for a loss of 1.35% on the session.

Spot gold falls below $3,290/oz as U.S. Consumer Confidence rises to 98 in May_1

“Consumer confidence improved in May after five consecutive months of decline,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards. The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index—business conditions, employment prospects, and future income—rose from their April lows.”

“Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects,” she added. “Consumers’ assessments of the present situation also improved. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.”

May’s rebound in confidence was reflected across all age groups and all income groups and political affiliations, with the strongest improvements among Republicans, but on a six-month moving average basis, confidence in all age and income groups was still down due to previous monthly declines.

“With the stock market continuing to recover in May, consumers’ outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April) and 37.7% expecting stock prices to decline (down from 47.2% in April),” Guichard added. “This was one of the survey questions with the strongest improvement after the May 12 trade deal.”

Respondents once again pointed to tariffs as their number-one concern. “Notably, consumers continued to express concerns about tariffs increasing prices and having negative impacts on the economy, but some also expressed hopes that the announced and future trade deals could support economic activity,” the report said. “While inflation and high prices remained an important concern for consumers in May, there were also some mentions of easing inflation and lower gas prices.”

Source: kitco

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Adam

Economic

Consumer optimism got a much-needed boost in May on hopes for trade pace between the U.S. and China, according to a survey Tuesday.

The Conference Board’s Consumer Confidence Index leaped to 98.0, a 12.3-point increase from April and much better than the Dow Jones consensus estimate for 86.0.

Much of the positive sentiment, according to board officials, came from developments in the U.S.-China trade impasse, most notably President Donald Trump’s halting of the most severe tariffs on May 12.

“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, the Conference Board’s senior economist for global indicators.

May’s rebound followed five straight months of declines. Consumers and investors had grown sour on economic prospects amid the intensifying trade war that Trump has launched against U.S. global trading partners, with China a particular target.

However, the two sides reached a truce in early May, marking the second major walk-back of Trump’s so-called reciprocal tariffs since he levied them in his April 2 “liberation day” announcement.

Other board sentiment indicators also increased.

The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4 point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.

Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared to 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%.

Survey officials said sentiment improved across age, income and political affiliation, though noting that the “strongest improvements” came from Republicans.

Source: cnbc

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Adam

Bond

Treasury yields slipped on Tuesday as markets reopened after the holiday, buoyed by optimism surrounding U.S.-EU trade talks.

The 30-year Treasury yield was down over 6 basis points at 4.975%. The 10-year Treasury shed nearly 5 basis points to 4.465%. The 2-year yield was less than 1 basis point lower at 3.981%.

One basis point is equivalent to 0.01%, and yields move inversely to prices.

President Donald Trump announced over the weekend that he would postpone a planned 50% tariff on the European Union until July 9, following a request from European Commission President Ursula von der Leyen. The import duty was initially set to take effect on June 1.

“The EU and US share the world’s most consequential and close trade relationship,” Von der Leyen said in a post on X over the weekend. “To reach a good deal, we would need the time until July 9.” She added that the EU was “ready to advance talks swiftly and decisively.”

Tuesday’s bond market moves come on the heels of a volatile few days before Memorial Day. Last week saw a global bond rout sparked by renewed fiscal anxieties following Moody’s downgrade of U.S. credit rating and concerns surrounding Trump’s tax bill.

Investors are also looking toward the Federal Reserve’s minutes from its May 6-7 meeting, which will be published on Wednesday. Among the other data points due this week is April’s core personal consumption expenditures price on Friday.

source : cnbc

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Glendon

Economic

Forex

FILE - Shoppers pass by large-screen televisions on display in a Costco warehouse Thursday, Dec. 19, 2024, in Colorado Springs, Colo. (AP Photo/David Zalubowski, File) · Associated Press Finance · ASSOCIATED PRESS

Americans’ views of the economy improved in May after five straight months of declines sent consumer confidence to the lowest level since the onset of the COVID-19 pandemic, largely driven by anxiety over the impact of President Donald Trump’s tariffs.

The Conference Board said Tuesday that its consumer confidence index rose 12.3 points in May to 98, up from April’s 85.7, its lowest reading since May 2020.

A measure of Americans’ short-term expectations for their income, business conditions and the job market jumped 17.4 points to 72.8, but remained below 80, which can signal a recession ahead.

The proportion of consumers surveyed saying they think a U.S. recession is coming in the next 12 months also declined from April.

Source: Yahoo Finance

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Olivia Brooks

Economic

Headline Drop Driven by Transportation Sector Pullback

New orders for U.S. manufactured durable goods fell sharply in April, dropping 6.3% to $296.3 billion, following a strong 7.6% increase in March. The report from the U.S. Census Bureau highlights that the monthly downturn was largely driven by a steep decline in transportation equipment orders, which fell 17.1%, or $20.3 billion, to $98.8 billion.

Transportation had previously supported order growth for four straight months, but April’s reversal marks a significant correction. Excluding transportation, however, durable goods orders rose slightly by 0.2%, indicating underlying demand in other sectors remains stable.

Durable Goods Orders Slide 6.3% After Four-Month Climb; Transportation Down 17%_2

Defense Orders Also Retreat Sharply

The decline was further exaggerated by a drop in defense-related demand. Excluding defense, new orders were down 7.5%, highlighting reduced government procurement activity during the month. With defense and transportation removed from the equation, the broader manufacturing outlook appears more neutral, suggesting volatility in headline figures may not reflect core demand.

Sectors Outside Transportation Show Modest Resilience

Despite the headline drop, the underlying manufacturing sector displayed resilience. The marginal 0.2% gain in non-transportation orders implies steady business investment in categories such as machinery, computers, and fabricated metal products. While the growth was minimal, the positive reading is significant given the drag from large-ticket transportation and defense items.

How Will the Federal Reserve View This Report?

For traders, the April durable goods report adds nuance to the Federal Reserve’s policy outlook. The central bank is closely monitoring demand-side indicators for signs of cooling that may warrant easing its restrictive policy stance. While the headline drop may appear bearish, the core increase could temper dovish interpretations. The Fed is likely to dissect the internals—particularly the modest non-transportation gains—when weighing its next move.

Short-Term Outlook: Neutral-to-Bearish for Manufacturing Stocks

The immediate market impact is neutral to bearish, particularly for transportation and defense-linked names. The sharp drop in top-line orders could weigh on sentiment around industrials and aerospace stocks. However, the modest growth in core orders offers a buffer, preventing a full bearish turn. Barring further weakness in May, traders should view the April data as a sector-specific cooldown rather than a broad manufacturing slump.

Source: FX Empire

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Adam

Commodity

Oil Prices Hold Firm as Trade Tensions Ease, Eyes Turn to OPEC+

Crude futures held steady early Tuesday, with WTI last trading near $61.65, down 0.20%, and Brent showing similar subdued movement. Traders are taking a wait-and-see stance ahead of the key OPEC+ meeting later this week. Despite relief from trade war tensions, market upside is being capped by uncertainty over the group’s upcoming output decision.

UBS analysts noted that easing trade tensions are providing some support, but gains remain limited until clarity emerges from the OPEC+ meeting set for May 28. President Trump’s extension of EU trade talks to July 9 helped ease fears of imminent demand destruction, providing modest tailwinds for crude.

OPEC+ Set to Finalize July Output — Traders Brace for Supply Clues

All eyes are on OPEC+ as the group prepares to finalize production quotas for July. Sources indicate that a baseline increase of 411,000 barrels per day is on the table, although this has yet to be confirmed. Russian Deputy Prime Minister Alexander Novak stated Monday that discussions on raising output have not yet occurred, signaling potential pushback from some members.

Adding to the uncertainty, OPEC+ will hold its ministerial meeting online Tuesday, while the subgroup of eight members implementing voluntary cuts is now expected to meet a day earlier than scheduled, on May 31. Traders are watching closely to see if this subgroup softens its stance on output restraint, which could flood the market with additional barrels.

Iran Sanctions Risk Keeps Bullish Undercurrent Alive

In the background, geopolitical risks remain supportive for oil. Iranian President Masoud Pezeshkian suggested Monday that Iran could withstand a collapse in nuclear talks with the U.S., implying that sanctions—and thus limited Iranian exports—will likely persist. Continued restrictions on Iranian crude supply could offer a floor to prices amid broader uncertainty.

WTI Constrained Below Key Moving Averages Ahead of Breakout Catalyst

Daily Light Crude Oil Futures

WTI futures remain rangebound, with resistance at $63.43–$64.40 and support near $59.51. The 50-day moving average at $62.70 and the 200-day at $66.83 continue to cap rallies. Price action is consolidating below resistance, suggesting a breakout will depend heavily on OPEC+ clarity.

Traders Watch for OPEC+ Signal — Neutral Bias Until Decision Lands

Traders are focused squarely on OPEC+ headlines, with direction hinging on whether the group signals more aggressive production increases or maintains current restraint. While geopolitical support and trade relief provide some near-term stability, the lack of technical momentum points to a neutral-to-bearish bias unless OPEC+ surprises with a conservative output stance.

source : fxempire

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Adam

Economic

Bond

Markets were left nonplussed by increasingly erratic U.S. tariff announcements over the weekend, although nerves have been soothed slightly by the reduction of tensions at the long-end of several major government bond markets.

I'll get into all of this below and then explore why the U.S. government, issuing ever more debt, should be wary about becoming overly reliant on the kindness of private investors.

Today's Market Minute

* U.S. President Donald Trump said Vladimir Putin had "gone absolutely CRAZY" by unleashing a massive aerial attack on Ukraine and said he was weighing new sanctions on Moscow.

* The euro could become a viable alternative to the dollar, earning the 20-nation bloc immense benefits, if governments could only strengthen the bloc's financial and security architecture, ECB President Christine Lagarde said on Monday.

* Japan will consider trimming issuance of super-long bonds in the wake of recent sharp rises in yields for the notes, as policymakers seek to soothe market concerns about worsening government finances.

* Ukraine’s security is critical to Europe, but the continent can no longer rely on the United States to support the country’s war with Russia. The EU, the UK and other willing countries therefore need a way to support Ukraine that does not require Trump’s permission. The best option is to unlock Russia’s $300 billion of frozen central bank assets. Read the latest essay from Breakingviews columnist Hugo Dixon.

* U.S. President Donald Trump’s budget bill is likely to bake in outsized deficits for years to come. Listen to the latest episode of Reuters Econ World podcast, where I speak with host Carmel Crimmins about what that means for U.S. debt levels and the wider economy.

Trade confusion and long yield relief

After a torrid week for long-dated sovereign debt, some calm was restored on Tuesday by indications Japan would consider trimming sales of super-long bonds. Policymakers in Tokyo are seeking to reduce market concerns about the country's worsening government finances.

Yields on 30-year Japanese government bonds fell by up to 20 basis points to 2.83% after the report, the lowest since May 8. The benchmark 10-year yield dropped 5 points to 1.455%. The dollar rose 0.5% against the yen to 143.9.

Also helping ease pressure on the long end of bond markets was a Financial Times interview with Britain's debt management chief Jessica Pulay, who emphasized that the UK had shifted to shorter-term borrowing this year. Pulay noted that demand for long bonds from pension funds has waned due to demographics and pension scheme changes.

UK 30-year gilt yields fell back almost 20 bps from last week's peaks.

U.S. 30-year yields declined in sympathy, retreating below 5% for the first time since last Tuesday.

As traders returned following the long Memorial Day weekend, U.S. stock futures were up smartly, largely because Trump has backed off from Friday's threat to impose 50% tariffs on EU imports next month. He instead restored a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal.

European stocks (.STOXXE) , opens new tab were higher too on Tuesday, with the euro slipping back after two days of gains on the confusing policy twists.

The back and forth on tariffs will likely keep trading on edge, but markets will likely have to get used to this policy volatility in the weeks and months ahead.

Federal Reserve Bank of Minneapolis President Neel Kashkari on Tuesday called for keeping U.S. interest rates steady until there is more clarity on how higher tariffs are affecting inflation. He warned against simply looking through the impact of a potential supply side shock.

"It may take months or years for negotiations to fully conclude, and there could be tit-for-tat tariff increases as trading partners respond to one other," he said.

This week's release of the April personal consumption expenditures update - the Fed's favored inflation gauge - will be monitored closely.

U.S. markets return amid a sweep of economic updates, including durable goods orders for April and consumer confidence readings for May.

Meanwhile, tech investors are turning to the big earnings event of the week. Shares of semiconductor industry bellwether Nvidia (NVDA.O) , opens new tab gained 2.8% as the company is slated to report quarterly earnings after markets close on Wednesday.

Elsewhere, Trump Media & Technology Group (DJT.O) , opens new tab advanced 10% after a media report said Trump's social media firm planned to raise about $3 billion to spend on cryptocurrencies such as bitcoin.

Now to today's deep dive, where I explore how declining investor appetite for long-duration debt could stress government funding markets.

Long bond blues stress the 'bedrock'

Bonds had a bruising week recently and investor aversion to long-dated government debt appears to be rising.

Anxiety over U.S. debts and deficits took center stage as Trump's fiscal bill passed the House of Representatives - potentially adding another $3.8 trillion to the $36 trillion debt pile over the coming decade.

But mountainous government debts across major economies and unpredictable inflation, amplified by unfolding trade wars, fuel uncertainty over the central bank interest rate horizon.

At the same time, central banks continue to reduce the huge holdings of government debt accumulated over the past 15 years, particularly during the pandemic.

These developments require private investors to take up the growing slack at a nervy time, even as many of these investors are increasingly price-sensitive and wary of long-duration bonds.

Many non-bank private investors embrace long-duration debt. This includes pension and insurance funds that crave steady long-term income streams from relatively safe government credits in order to match their long-term liabilities.

Others, such as mutual funds or hedge funds, may be less willing to absorb outsized price risks.

And as exchange-traded funds that track long-term Treasuries show, it's been a dire few years.

The iShares ETF of U.S. Treasuries with remaining maturities of 20 years or more is down 3.5% for the year so far, almost as much as the loss in Wall Street's tech-heavy Nasdaq equity index (.IXIC) , opens new tab.

It has now halved in price since it peaked during the pandemic and is down 30% from the eve of the COVID outbreak.

While "terming out" government debt to longer maturities has long been seen as a prudent practice to reduce roll-over risks with too much short-dated borrowing, this strategy may now contain frailties of its own due to shifts in the investor base.

With economic and policy uncertainties rife, attention is shifting toward private investor commitment and market stability.

MARKET BEDROCK

The International Monetary Fund , opens new tab last week highlighted potential risks to the functioning of government bond markets that policymakers need to address to protect what is called "the bedrock of capital markets".

In a piece that focused on liquidity risks and the smooth pricing of a market covering some $80 trillion of core government debt, it pointed out how bank dealers continue to play a critical role and have expanded sovereign bond holdings.

But it said that the rise in bank dealers' core sovereign debt had not kept pace with the growth of outstanding bonds.

The stock of U.S. Treasury securities grew nearly fourfold in the 15 years through 2023, for example, but U.S. bank-dealer balance sheets expanded by just 1.5 times.

Now, U.S. Treasury securities account for almost 70% of primary dealers' securities inventories - the highest share in over a decade - and about three-quarters of their securities financing is also collateralized by Treasuries.

"The challenge is that dealers' internal limits on concentrated holdings could curtail intermediation activities, especially in times of stress," the IMF blog noted.

That leaves the other non-bank financial institutions (NBFIs) to supplement the role of market makers.

"However, because they (NBFIs) have a generally weaker mandate to support government bond markets compared to bank-dealers, they may also quickly curb activities during times of market stress," the IMF piece said.

"The increasing presence of NBFIs makes market resilience more uncertain and opaque because they tend to be less regulated and subject to fewer data reporting requirements."

The IMF then goes on to urge governments to ensure more "structural resilience" via more central clearing, more timely, consistent and comprehensive data on market pricing and transactions and better information on NBFIs' soundness and reliability in times of stress.

To be sure, bond markets appear to be clearing well despite the outsize policy upheavals under way. But few doubt that there are difficult moments ahead and stress at the "bedrock" could be seismic.

Morning Bid: Trade confusion and long yield relief_1

Bar chart of average bond government maturities in G7 and China, ranging from UK at 14.0 years to US at 5.8 years

Chart of the day

Morning Bid: Trade confusion and long yield relief_2

A bar chart showing EU exports of goods to the United States in 2024. The three largest exporters to the United States in the EU were Germany (€161 billion), Ireland (€72 billion) and Italy (€65 billion)

Europe's STOXX 600 index stock index lost 1% on Friday after Trump threatened to impose 50% import duties on Europe from June 1, but has since recouped all of that after he said he was postponing them and continuing negotiations. The euro gained regardless and hit its highest in three weeks on Monday before falling somewhat today.

The United States was the European Union's biggest export partner in 2024, making up 20.6% of exports, according to Eurostat. Medicinal and pharmaceutical products were the EU's most exported sector to the U.S. in 2024, followed by motor vehicles and aircraft and associated equipment, the data showed. The three largest exporters to the United States in the EU were Germany, which exported 161 billion euros ($182.62 billion) worth of goods, Ireland, at 72 billion euros, and Italy, at 65 billion euros.

Today's events to watch

* U.S. April durable goods orders (8:30 a.m EDT), March home prices (9:00 a.m. EDT), May consumer confidence (10:00 a.m. EDT), Dallas Federal Reserve May manufacturing survey (10:30 a.m. EDT)

* Richmond Federal Reserve President Thomas Barkin, New York Fed President John Williams and Minneapolis Fed chief Neel Kashkari all speak

* U.S. Treasury sells $69 billion of 2-year notes

* U.S. corporate earnings: Autozone

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias.