8 min readWeekly Recap
US stocks and the USD fell last week amid concerns over the US fiscal position and after Trump ramped up the trade war. The S&P 500 dropped 2.6%, while the USD tumbled almost 2%. Treasury yields shot higher as the sell-America trade ramped up.
Moody’s cut the US credit rating, citing concerns over the rising US debt pile. Trump’s Big Beautiful Bill, passing a vote in the House of Representatives, then added to those debt worries, given that the unfunded tax cuts were expected to add $3 to $5 trillion to the US $36 trillion debt pile.
On Friday, Trump threatened a 50% trade tariff on the EU because he was disappointed with the direction of trade talks. He also told Apple that iPhones not made in the US would be subject to 25% tariffs. These warnings turned attention back to trade tensions, which were hitting risk sentiment.
However, discussions with the EU appear to have taken a more positive turn. Trump is delaying the 50% tariffs, giving the EU until July 9th to arrange a trade deal before those tariffs would be applied. This latest development is boosting risk sentiment at the start of the week, with global indices set for a higher start.
Nvidia earnings (Wednesday)
Nvidia will report quarterly earnings after the close on May 28. Most attention will be on the quarterly figures and guidance, and any comments regarding US-China relations and chip bans will also be under the spotlight since China and the US agreed to lower tariffs. Nvidia CEO Jensen Huang warned of a tremendous loss as export controls limit US access to China’s market. Looking at the numbers, he expects $5.5 billion in charges in Q1 2026 related to H20 products as the US demands a license now to export to China. Q1 expectations for EPS or $0.92 with revenue of $43.09 billion, data centres are still considered the key revenue driver at $39.07 billion. Profit margins are expected at 71%, meanwhile, the outlook for Q2 revenue is seen at $46.59 billion with the EPS at $1.01.
Nvidia’s results not only drive Nvidia’s share price but also the wider market. The Nasdaq could rise if the numbers impress. However, disappointing numbers could pull the index lower.
Australia CPI (Wednesday)
Expectations are for CPI to ease to 2.3% year on year, down from 2.4%. On a monthly basis, CPI is expected to rise 0.3%. The data will be closely watched following the RBA’s rate cut in early May, which took the OCR to 3.85%. The RBA noted that although inflation is cooling, the outlook remains uncertain and risks to inflation are more balanced. The cut came with a downgrade of global growth forecasts and cooler domestic core inflation guidance in the central bank’s quarterly update. A softer inflation print could support the RBA’s dovish stance, with expectations for two more rate cuts in the latter part of this year. This could pull AUD/USD lower. However, stickier inflation, particularly in key components, could complicate the easing path and lift AUD/USD.
RBNZ rate decision (Wednesday)
The RBNZ is expected to cut interest rates for a sixth straight meeting, taking the OCR 25 basis points lower to 3.25%. The move is 91% priced in and comes after the RBNZ lowered the OCR rate by 25 basis points at the last meeting in April in a unanimous decision, in which it also noted that a further reduction was likely. Policymakers noted that global trade barriers weaken the outlook for global growth and are in a good position to respond to developments. Recent speeches from policymakers have continued to highlight uncertainty stemming from trade tariffs on the supply side, which could impact the New Zealand economy. NZD/USD is trading at the upper end of its recent range above .60. A more dovish RBNZ could pull the pair lower.
FOMC minutes (Wednesday)
The Federal Reserve held interest rates steady at the meeting, which was in line with expectations as the FOMC stuck with its wait-and-see approach. Currently, the Federal Reserve sees the economy growing at a modest pace with inflation slightly above its 2% target. However, the Fed also acknowledged the risk of higher inflation and higher unemployment, partly due to the trade policy. Federal Reserve Chair Jerome Powell noted that policy was in a good place, allowing them to respond swiftly as economic conditions change. Expectations are for the feds to cut interest rates in the year’s second half, but uncertainty remains elevated. The minutes could be considered stale following multiple Fed speakers last week. Any sense that the Fed is adopting a more hawkish stance could pull Gold and US stocks lower.
OPEC JMMC (Wednesday)
The OPEC JMMC meets on Wednesday ahead of its full ministerial meeting on June 1st, with delegates expected to discuss the prospect of a third consecutive output hike. Reports have suggested a potential 411,000 barrels per day increase for July is being considered, but no final decision has been reached. Such a move would maintain Saudi Arabia’s recent strategy of increasing market share rather than supporting price growth. Oil struggles above $60 in the middle of its recent range.
German CPI (Friday)
German CPI remains close to the ECB’s 2% target at 2.1% year on year in April, marking its lowest level since October 2024. Meanwhile, producer prices, which are considered a lead indicator for CPI were also weaker than expected, falling the most in five years at -0.5% MoM. Elsewhere, German PMI figures last week showed business activity contracted in May amid a slump in services. The manufacturing PMI was also weaker than expected. ECB policy makers have also highlighted the disinflationary impact they view Trump’s trade policies as having. The weakening economic outlook in the eurozone’s largest economy points to further rate cuts from the ECB. The central bank is expected to cut rates by 25 basis points in June and to cut once more across the remainder of the year, potentially. Weaker inflation could pull EUR/USD lower.
Tokyo CPI (Friday)
Tokyo CPI is considered a leading indicator of the national CPI, which is typically released a couple of weeks later. So investors will watch for clues for the outlook, as any signs of increasing inflation could signal to hotter national inflation. Data last week showed that Japan’s core CPI rose to 3.4%. The data comes at a difficult time for the BoJ, which is facing an increasingly complicated backdrop of sticky inflation and weakening industrial output owing to pressures from recent US auto tariffs.
Hotter inflation data could lift the yen, pulling USD/JPY lower.
US core PCE (Friday)
US Core PCE, the Federal Reserve’s preferred gauge for inflation, softened in March to 2.6% in line with expectations, while spending remained resilient. Personal income rose 0.5% monthly, and spending jumped 0.7%, ahead of 0.6% expectations. The data pointed to a solid consumer amid easing inflation. Whilst this was good news, the broad expectation is that inflationary pressures could start to increase due to Trump’s trade tariff policies, and consumption could fall as consumer sentiment deteriorates. So far, this hasn’t shown up in data, but the market will be watching closely for the impact of these policies on the US economy.
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