From Yahoo Finance: 2025-05-16 16:35:00

The latest consumer sentiment and inflation expectations survey from the University of Michigan revealed consumer sentiment expectations are at their lowest since 1980, with one-year inflation expectations above 6%, the highest since 1981. The fear of tariffs pushing up prices is spooking consumers, potentially leading to a slowdown in spending and a possible ‘stagflation’ scenario later this year. While markets initially rallied on the US-China trade truce, uncertainty still looms, but the S&P 500 and Nasdaq surged 5% and 7%, respectively, ending the week on a strong note.

Economists raised growth forecasts quickly after the trade truce, leading to remarkable market rallies, with the Nasdaq up 30% since April. Despite some firms adjusting guidance due to tariff uncertainty, U.S. and European earnings were largely positive. Bond yields rebounded on renewed growth optimism, but U.S. fiscal concerns are growing as Republicans rejected President Trump’s tax package for not addressing spending cuts. Surprising data releases this week included strong UK GDP growth, weaker-than-expected Japanese GDP, and the steepest fall in U.S. producer prices since 2009.



Read more at Yahoo Finance: Market elation trumps brewing stagflation