Weekly Market Commentary May 26, 2026

Week in Review

Last week’s macro releases pointed to a resilient but slightly moderating economic backdrop. U.S. crude oil inventories recorded a sharp draw of -7.86 million barrels, well below expectations of roughly -2.5 million (prior: -4.3 million), indicating stronger demand and providing modest upward pressure on energy prices and inflation expectations. The Federal Open Market Committee (FOMC) meeting minutes reinforced a cautious, data-dependent stance, with policymakers signaling persistent inflation risks and little urgency to ease policy, supporting a higher-for-longer rate environment.

On activity data, Purchasing Managers’ Indexes (PMIs) were mixed but still constructive. Manufacturing surprised to the upside at 55.3 versus 53.8 expected, reflecting strong expansion in the industrial sector. In contrast, the Services PMI came in at 50.9 versus 51.1 expected, indicating continued expansion but modest cooling in momentum rather than outright weakness. This suggests some normalization in services demand while overall activity remains in growth territory.

Labor market conditions remain stable, with jobless claims continuing to track near low levels, consistent with a still-tight labor market and limited signs of deterioration.

Overall, the data reinforces a resilient growth environment with pockets of moderation, where strong manufacturing and firm labor conditions offset softer (but still expanding) services activity. Combined with tighter energy markets and a cautious Fed, this keeps inflation risks tilted to the upside, likely sustaining elevated rate expectations, upward pressure on yields, and a selective equity backdrop.

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