Key Focus This Week:
“PCE Inflation Data, Treasury Yields, and AI-Driven Positioning Remain the Market’s Core Focus”
This week, market attention will primarily center on U.S. PCE inflation data, the Federal Reserve’s policy trajectory, and the direction of U.S. Treasury yields. With long-term consumer inflation expectations recently reaccelerating, investors are reassessing the possibility of a “higher for longer” interest rate environment. Markets will closely monitor whether upcoming inflation data continues to exceed expectations, and whether this could further reduce expectations for Federal Reserve rate cuts later this year.
At the same time, upcoming remarks from Federal Reserve officials will remain in focus. Recent FOMC meeting minutes indicated that policymakers remain divided on the future path of monetary easing, with some officials expressing concerns that higher energy prices, trade policy uncertainty, and persistent services inflation could create renewed upside risks to inflation. While markets broadly expect the Fed to leave interest rates unchanged at the June meeting, expectations for the number of rate cuts in the second half of the year have declined significantly compared with earlier this year.
In the rates market, the U.S. 10-year Treasury yield has recently moved back above 4.5%. If economic data continues to demonstrate resilience, Treasury yields could extend higher, placing additional valuation pressure on growth-oriented equities. Recent volatility in the bond market has also begun to increasingly impact technology stocks, as markets gradually transition from a purely AI-driven narrative toward a trading environment defined by the coexistence of AI growth and structurally elevated interest rates.
Technology and AI-related sectors remain the market’s dominant structural theme. Investors will continue monitoring trends across semiconductors, AI servers, cloud computing, and capital expenditure plans among large-cap technology companies. Although higher interest rates are creating valuation headwinds for the technology sector, markets generally continue to believe that the AI capital expenditure cycle remains in its early stages. Capital flows have also continued rotating into AI infrastructure, data centers, and power-related sectors in recent weeks.
Week’s Key Economic Data & News Recap
Fed Minutes Reveal Growing Policy Diverence
On May 20, the Federal Reserve released the minutes from the April 28–29 FOMC meeting. Policymakers voted to maintain the federal funds target range at 3.50%–3.75%. The minutes revealed increasing divergence among Fed officials regarding the future rate path, with several policymakers expressing concerns that rising energy prices, persistent services inflation, and trade policy uncertainty could generate renewed inflationary pressure.
During the period, both U.S. 2-year and 10-year Treasury yields moved higher, while near-term inflation breakevens also increased. Markets interpreted this as a sign that internal disagreement within the Federal Reserve is widening, reflecting an economic environment characterized by resilient growth but still elevated inflation.
U.S. Consumer Sentiment Falls to Record Lows While Long-Term Inflation Expectations Rise Further
The final May reading of the University of Michigan Consumer Sentiment Index declined to 44.8, below the preliminary estimate of 48.2, marking the lowest level on record. One-year inflation expectations rose from 4.7% to 4.8%, while long-term inflation expectations increased from 3.5% to 3.9%.
Markets believe that rising energy prices and oil-related pressures linked to Middle East geopolitical tensions have been major contributors to the recent increase in consumer inflation expectations. Given that consumer spending accounts for roughly two-thirds of U.S. GDP, the continued deterioration in consumer sentiment has also intensified concerns surrounding a potential slowdown in future economic growth.
U.S. Labor Market Remains Stable
According to data released by the U.S. Department of Labor, initial jobless claims for the week ending May 16 totaled 209,000, a decline of 3,000 from the previous week, while the four-week moving average fell to 202,500. Continuing claims for the week ending May 9 stood at 1.782 million.
Overall, the U.S. labor market has yet to show meaningful signs of deterioration, reducing the urgency for the Federal Reserve to begin cutting interest rates despite ongoing inflation pressures. The continued resilience in labor market data has also been one of the key factors supporting elevated Treasury yields in recent weeks.
U.S. Business Activity Remains in Expansion Territory While Inflation Pressures Reaccelerate
S&P Global’s May Flash PMI data showed that the U.S. Composite Output Index came in at 51.7. Manufacturing PMI rose to 55.3, reaching its highest level in 48 months, while Services PMI registered 50.9.
The report also noted that the pace of input cost increases accelerated to the fastest level since 2022, while selling price inflation climbed to its highest level since August 2022. This has further reinforced market concerns that inflationary pressures may be reaccelerating, prompting investors to reassess expectations regarding the timing and pace of future Federal Reserve rate cuts.
Investing with an AimStar's investment professional
Want expert advice at every step of your investing journey?
AimStar’s investment professionals can set you on the right course – and they can meet in-person or online.
Market Performance Review – Last Week
Source: Yahoo Finance
Canadian Equities:
Last week, the S&P/TSX Composite Index largely traded within the 33,750–34,500 range, maintaining a gradual upward trajectory, with the index posting a cumulative 5-day gain of 0.81%. Supported by continued strength in the energy sector amid elevated oil prices, along with a short-term improvement in market risk sentiment, Canadian equities overall exhibited a pattern of high-level consolidation followed by a moderate upward advance.
Source: Yahoo Finance
U.S. Equities:
Source: Yahoo Finance
U.S. Bonds:
Last week, the U.S. 10-year Treasury yield generally exhibited a pattern of high-level consolidation followed by a modest pullback. The CBOE Interest Rate 10 Year T Note briefly climbed to 4.67% before gradually easing back to 4.558%, representing an approximate 0.50% decline over the five-day period. Although yields softened slightly in the short term, they remained firmly above the 4.50% level, indicating that market expectations for a “Higher for Longer” interest rate environment remain firmly entrenched.
Source: Yahoo Finance
Forex Market：
Last week, USD/CAD generally maintained a volatile upward trend, with the exchange rate gradually rising from 1.3735 to 1.3812, representing a cumulative five-day gain of 0.37%. The U.S. dollar regained short-term strength, while the Canadian dollar remained relatively pressured despite continued support from higher oil prices. Overall, the currency pair exhibited a pattern of high-level consolidation followed by a moderate upward advance.
Source: Yahoo Finance
Gold & Silver Market:
Last week, the gold and silver markets generally maintained a pattern of high-level consolidation with a slightly weaker tone. Gold Futures declined from around 4,555 to 4,515.40, posting a cumulative five-day loss of 0.89%, while Silver Futures fell from approximately 77.15 to 76.26, representing a 1.17% decline over the same period. Overall, amid a strengthening U.S. dollar and persistently elevated long-term U.S. Treasury yields, precious metals exhibited a market structure characterized by high-level consolidation followed by a gradual pullback.
Source: Yahoo Finance
Oil Market:
Last week, the global crude oil market experienced a notable pullback following a period of high-level consolidation. Brent Crude Oil Futures declined steadily from around 111.20 to 104.14, recording a cumulative five-day loss of 4.69%. Although oil prices remained elevated above the USD 100 level, the market began to show signs of profit-taking and easing risk sentiment in the short term. Overall, the market structure reflected a pattern of retreat from elevated levels followed by weaker sideways consolidation.
- Let us contact you
Investing with an AimStar's investment professional
Want expert advice at every step of your investing journey?
AimStar’s investment professionals can set you on the right course – and they can meet in-person or online.
Financial Market Data Copyright © 2026 AimStar myportfolio. Data as of May 25, 2026, 12:30 PM EST
WHAT'S HAPPENING THIS WEEK
Upcoming Events (May 25 – May 29, 2026)
May 25 (Monday)
U.S. markets will be closed in observance of the Memorial Day holiday, and overall trading volume is expected to decline significantly.
Markets will continue digesting the impact of last week’s earnings reports from NVIDIA and other major technology companies, while also monitoring movements in U.S. Treasury yields and oil prices.
May 26 (Tuesday)
Box, Okta, Agora, PVH, and Bank of Montreal are scheduled to report earnings.
Investors will focus on whether enterprise software demand is beginning to slow, and whether AI-related spending can continue supporting growth across cloud computing and cybersecurity sectors.
Earnings from Bank of Montreal will provide insight into Canadian banking trends, including loan growth, consumer credit stress, and commercial real estate risk exposure.
May 27 (Wednesday)
Dick’s Sporting Goods, Salesforce, Snowflake, Marvell Technology, and HP are scheduled to release earnings.
Salesforce and Snowflake will serve as key indicators for the AI software sector, with markets closely watching:
Whether AI feature monetization is accelerating
Whether enterprise IT budgets are beginning to soften
Whether profit margins can remain elevated
Earnings from Marvell Technology will directly influence expectations surrounding AI networking chips and data center demand.
May 28 (Thursday)
Best Buy, Costco, Dell, UiPath, Autodesk, NetApp, and CIBC are scheduled to report earnings.
Best Buy and Costco will help determine whether U.S. consumer demand for electronics and everyday spending remains resilient.
Earnings from Dell will be an important indicator for AI server and enterprise hardware demand, with investors closely monitoring growth in AI PC and data center orders.
UiPath and Autodesk will provide insight into trends in enterprise automation and industrial software spending.
May 29 (Friday)
e.l.f. Beauty, Gap, BitFuFu, and Knorr-Bremse are scheduled to release earnings.
Markets will continue evaluating trends in discretionary consumer spending, along with retail inventory levels and profit margin performance.
Earnings from BitFuFu will also influence market sentiment surrounding cryptocurrency mining and Bitcoin-related sectors.
Author by: Sarah San
Edited & Published by: Sarah San
May 25th , 2026 13:00 PM EST. 10 min read
AimStar Capital Group Inc. is a Canadian full-service Investment Dealer, regulated by Canadian Investment Regulatory Organization (CIRO) and a member of Canadian Investor Protection Fund (CIPF). As an independent firm, AimStar is built on a foundation of innovation, integrity, and client-centricity. They are committed to providing unbiased advice and dedicated to the client’s needs, helping them achieve their financial goals.
AimStar is recognized as a Wealth Professionals 5-star Wealth Management Firm for 2024, this award recognized AimStar has offered exceptional client experience, a proven investment track record, continuous innovation, and stringent regulatory compliance.