Weekly economic commentary: Waiting for clarity

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.

Download the Full Report!