Weekly economic commentary: Waiting for clarity

Wells Fargo Research Team Wells Fargo

Summary

United States: Waiting for clarity

Uncertainty continues to shape economic data. Personal spending was revised lower in Q1 but rose at a modest pace in April amid sturdy income growth. Inflation also remains in check, but we expect to see a tariff-driven bounce in goods prices in the coming months. Meanwhile, the appetite for large capex is generally weak and the housing market remains on ice.
Next week: ISM Manufacturing (Mon.), ISM Services (Wed.), Employment (Fri.)

International: Global GDP growth galore!

GDP growth data for the first quarter were released from countries all over the world this week. Canada's figures were somewhat mixed, but showed enough resilience in our view for the Bank of Canada to remain on hold next week. Sweden's growth printed to the soft side, potentially reviving the possibility of one final rate cut from the central bank. Brazil's economy continued to show resilience and India's report was mixed, but solid overall.
Next week: Switzerland CPI (Tue.), Bank of Canada (Wed.), European Central Bank (Thu.)

Interest rate watch: Mortgage rates move back up

Mortgage rates are back on the rise. According to Freddie Mac, the average 30-year commitment rate climbed to 6.89% during the week of May 29, the highest level since early February. Stepping back, mortgage rates are little changed over the past year. High financing costs remain a significant constraint on residential activity.

Credit market insights: Consumer balancing act

Betting against the U.S. consumer still looks like a losing strategy. Across several surveys, consumer credit fundamentals have stabilized over the past year after marginally weakening throughout 2022-2023.

Topic of the week: A bump in the tariff road

A U.S. trade court blocked the tariffs President Trump implemented under the International Emergency Economic Powers Act of 1977 (IEEPA) this week. While this provides tariff-rate relief, there remains considerable uncertainty around the future of trade policy.

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Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.