Perspective: Mid-Day Commentary for May 28

By: Arlan Suderman, Chief Commodities Economist

Tue, 28 May 2024, 16:38

Perspective: Midday Commentary

Guest Commentary by Mike Castle

Market Intelligence - Senior Fertilizer Analyst

May 28 – Stocks are mixed at mid-day, with the tech heavy Nasdaq solidly in the green on strength in chip stocks as darling Nvidia pushes higher yet again, up nearly 6% at the time of writing, while the S&P 500 is narrowly in the green and the Dow Jones hangs in the red. The VIX is up on the day to just above 12.6, though that’s still very low historically speaking. The dollar is opening the short week in the red, hovering around the 104.4 level. Treasuries are hanging around unchanged on the day, with 10-year yields near 4.50% and 2-year yields near 4.95%. Crude oil is starting the week on a strong note, with nearby WTI pushing higher to trade just below the pivotal $80 level, while the ags remain largely mixed, selling off through the session as the wheat complex has fallen sharply from its highs but remains in the green.

U.S. consumer confidence improved in May, according to this morning’s Conference Board Consumer Confidence Index that showed a major jump to 102, up sharply from last month’s upwardly revised 97.5 and way above market expectations of a fall to 95.3. The Present Situation Index climbed to 143.1 in May, up from April’s 140.6, while the Expectations Index rose even more sharply to 74.6 from April’s 68.8. Despite the improvement in sentiment, some negative outlooks remained, with average 12-month inflation expectations rising from 5.3% to 5.4%, while the perceived likelihood of a U.S. recession in the next 12 months also rose. In their press release, the Conference Board also explicitly mentioned the Expectations Index holding below 80 for the fourth consecutive month, stating this is “the threshold which usually signals recession ahead.”

This contrasts with Friday’s consumer sentiment data from the University of Michigan, which showed a sharp decline in May compared to April, though not as sharp as initially anticipated on the mid-month flash reading. The divergence in readings between the two indexes is likely due to differences in how the questions are asked, but there were still some similarities. For example, Friday’s data agreed with today’s in terms of consumer inflation expectations rising, along with expectations for high interest rates sticking around longer than initially expected and weighing on the economy. Overall, the main interest in following these consumer sentiment readings is to shape expectations for consumer spending patterns, with strong consumer confidence taken as inflationary from increased consumer spending, while weak consumer confidence brings expectations of the opposite. With the mixed signals from these two readings, more focus will again be put on Friday’s upcoming PCE reading for the inflationary picture, as well as Thursday’s GDP growth estimate for a look into the overall strength of the economy.

U.S. housing price data released this morning showed continued increases but mixed signals overall, with the FHFA U.S. House Price Index climbing only 0.1% month-on-month in March while the Case-Shiller Home Price Index showed an 11-month high 1.6% month-on-month jump. The former came in well below its expected 0.5% month-on-month rise, while the latter doubled expectations of an only 0.8% rise. This follows last week’s release that showed existing home sales slump in April while prices rose to their highest since last June, with inventories growing as well. This will be an interesting trend to keep an eye on, with increased shelter costs playing a major role in the overall stickiness of inflation.

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Mike CastleTue, 04 Aug 2026, 14:58

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