Outlook for Next Week: US Economic Indicators (May 26 to 29)

The US financial markets will return from the long weekend of Memorial Day on Tuesday, facing a week of intensively published major economic data. The Consumer Confidence Index, core inflation, personal consumption expenditure, and the first quarter GDP revision will all be unveiled before this Thursday, which is expected to further clarify the market's expectations for the Federal Reserve's monetary policy path. **Tuesday (May 27): Consumer Confidence** The Conference Board's Consumer Confidence Index for May will be released at 10 am Eastern Time on Tuesday. Data from last month showed that the index rose slightly from 92.2 to 92.8, marking a third consecutive month of increase, slightly better than market expectations. However, analysts pointed out that the internal structure of the April data revealed some concerns. The "Present Situation Index," which reflects the current economic conditions, edged down slightly, while the forward-looking "Expectations Index" improved slightly due to the resilience of the job market and the recovery of the stock market. At the same time, consumers' concerns about rising energy prices and geopolitical uncertainties remain evident. If the May data exceed expectations, especially if the expectations index strengthens, it will support consumer discretionary consumption and retail sector stocks, and reinforce the dollar; if the data disappoint, it may intensify the market's bets on the early rate cuts from the Federal Reserve. **Thursday (May 29): PCE Inflation and Consumption Expenditure** The most closely watched data of the week will be released at 8:30 am (Eastern Time) on Thursday, the Bureau of Economic Analysis will simultaneously release the April Personal Consumption Expenditure (PCE) Price Index and consumption expenditure data. As the Federal Reserve's most preferred inflation indicator, the PCE index accelerated significantly in March, with the overall PCE rising by 3.5% year-on-year and 0.7% month-on-month, with most of the increase coming from energy prices. The core PCE, excluding food and energy, rose by 3.2% year-on-year and 0.3% month-on-month, indicating that underlying price pressures remain solid. Consumption expenditure also accelerated in March, with personal consumption expenditure growing by 0.9% month-on-month, but analysts pointed out that a significant part of this increase reflected price effects rather than an expansion of actual demand. The market will closely monitor the April core inflation reading. If the core PCE shows cooling, it will improve interest rate expectations and boost risk assets; if it maintains the high levels of March again, it will consolidate the Federal Reserve's expectation to extend the pause in rate cuts. Both inflation and consumption expenditure being strong would be the most unfavorable scenario for the bond market. **Thursday (May 29): Second Estimate of Q1 GDP** Also at 8:30 am on Thursday, the Bureau of Economic Analysis will release the second estimate of Q1 GDP, incorporating more complete data on trade, inventory, and business investment than the preliminary estimate. The initial estimate previously released showed that the economic growth rate slowed down in the first quarter compared to the previous quarter but still maintained positive growth, with consumption expenditure providing the main support, while the contributions of business investment and trade were mixed. Analysts have indicated that the US economy shows signs of weakening growth momentum but has not yet fallen into contraction. If the second estimate shows a significant upward revision, it will ease the market's recession worries and support the stock market and the dollar; if it is revised downwards, especially if it is dragged down by consumption or capital expenditure, it will reinforce the outside world's expectation for the Federal Reserve to shift to easing early, and put pressure on the dollar.