Daily Market Outlook, May 27, 2026
Daily Market Outlook, May 27, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute — Risk-On Rally, UK Risk Premium
Global equities are still in melt-up mode as AI enthusiasm and easing geopolitical risk overpower lingering macro concerns. The MSCI All Country World Index has reached a record high for a sixth consecutive session, while MSCI Asia gained 1.1% to an all-time peak. Korea remains the standout: the KOSPI is now up an extraordinary 100% this year, making it the world’s best-performing major index, while SK Hynix has gained more than 1,000% over 12 months and become only the third Asian company to cross a $1tn market cap. In the US, chip leadership remains just as powerful, with Micron surging 19% and pushing its market value above $1tn. S&P 500 and Nasdaq 100 futures point to further modest gains after Wall Street closed at records, and Europe is set to open higher. Oil is helping the risk-on tone. Brent is down 1.6% to around $98/bbl on optimism that the US and Iran may finalise a peace agreement, reducing the immediate inflation scare from the Strait of Hormuz disruption. Treasuries are holding their gains, with the 10yr yield a touch lower at 4.47%, while the Dollar is softer against most G10 currencies. The Kiwi stands out as the exception, buoyed by the RBNZ’s signal that rates may need to rise. Dollar-yen remains near 159, keeping intervention risk in focus, especially as the yen’s weakness becomes harder to square with Japan’s inflation and policy-normalisation debate.
The US consumer confidence report fits the current market narrative better than the headline weakness suggests. The Conference Board’s current conditions index fell to 121.2 from an upwardly revised 124.4, with respondents more concerned about the Iran war and its inflation consequences. Perceptions of both business conditions and the labour market have softened. But expectations improved modestly to 74.4 from an upwardly revised 73.4, with consumers still expecting activity and hiring to strengthen over the next six months. Both current conditions and expectations remain above the lows seen at the start of the year, suggesting the late-2025 rate cuts are still cushioning the economy. The supplementary questions also point to a manageable shock, provided the conflict does not extend. Around two-thirds of consumers said they had cut spending because of recent price rises, mostly by buying fewer items or avoiding expensive purchases. But those who delayed discretionary purchases still intend to make them within six months. That matters: if a US-Iran deal is finalised and energy prices stabilise, sentiment and consumption could rebound. If the disruption persists, however, delayed purchases could turn into cancelled purchases, making the hit to demand more durable.
The UK story is completely unique. Since Labour took office, long-end gilt yields have drifted steadily higher. Global rates, local policy-rate expectations and inflation all explain part of that move, but not the full magnitude or persistence. The UK long end has shown a higher-than-usual beta to global rates, which points to a domestic risk premium. The clearest driver is the market’s concern over a more expansionary fiscal stance and rising political uncertainty after Labour’s poor local election performance, where it lost more than half the seats it was defending. That has intensified calls for a leadership change and raised the perceived probability of a leftward policy shift. Andy Burnham is central to that pricing. He is viewed as the most left-leaning of the likely successors and has emerged as the front-runner. Market-implied probabilities from Polymarket suggest that the rise in the chance of a Burnham premiership is associated with the bulk of the incremental residual term premium in gilts, estimated at 20bps over the past quarter. If those probabilities continue rising in a linear fashion into the Makerfield by-election and a Burnham premiership becomes the baseline, there may be scope for a further 10yr term-premium increase of roughly 40bps, assuming the relationship seen over the past quarter holds. Burnham has tried to reassure markets by stressing continuity with the fiscal rules. That helps somewhat, especially in a gilt market already highly sensitive to fiscal credibility. But it has not yet been enough to unwind the embedded premium. Markets now prioritise the practical implications of fiscal policy over the strict adherence to fiscal rules, particularly its potential for greater redistribution, intervention, or tolerance for borrowing. With UK growth soft, fiscal space narrow and long-end yields already elevated, political uncertainty has a higher price than usual.
Overnight Headlines
RBNZ Holds Key Rate To Assess Fallout From Energy Shock
BoJ’s Ueda Warns Of Oil Shock Impact On Entire Inflation Regime
Australia’s Core Inflation Accelerates, Keeping RBA Hawkish
BoK Seen Favouring Hawkish Hold As Inflation Risks Grow
US Touts Iran Deal Prospects Amid Fresh Tensions In Hormuz
Germany, Canada To Sign Major LNG Deal As EZ Seeks Energy Security
Russia Weighs Curbing Diesel, Jet Fuel Exports As Attacks Grow
UK, Poland Sign Defence And Security Pact To Curb Russia Threat
UK Spy Chief Warns China Is Closing Cyber Gap With West
Treasury Yields Fall As Markets Watch Tense Talks Over Hormuz
Mizuho CEO: Bold Action From BoJ Would Be Better For Market
Yen Hovers Near Intervention Zone As Traders Weigh MidEast Risks
China’s Industrial Profits Surge At Fastest In Over Two Years
US Says $20.6B Of Tariff Refunds On The Way To Importers
S&P, NAS Hit Record Highs On AI Optimism, Micron Joins $1T Club
KOSPI Hits Record, SK Hynix Joins $1T Club After Samsung, Micron
Samsung Workers Approve Pay Deal, Shares Surge
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1740 (EU1.36b), 1.1200 (EU1.29b), 1.1800 (EU1.2b)
USD/JPY: 161.00 ($1.73b), 159.00 ($1.1b), 160.00 ($867.1m)
AUD/USD: 0.7200 (AUD731.2m), 0.6500 (AUD623.3m), 0.7050 (AUD595.2m)
USD/BRL: 5.0500 ($728.4m), 5.5500 ($457.7m), 5.0900 ($300m)
USD/CAD: 1.3585 ($380m), 1.3805 ($327.7m), 1.3630 ($300m)
NZD/USD: 0.6200 (NZD566.1m), 0.6275 (NZD422.3m), 0.5400 (NZD310m)
GBP/USD: 1.3655 (GBP437.9m), 1.3530 (GBP351.1m)
USD/MXN: 17.40 ($711.1m), 17.70 ($580.4m)
CFTC Positions as of May 22, 2026:
Speculators are making some notable moves in the futures market! They've reduced their net short position in CBOT US 5-year Treasury futures by 11,629 contracts, bringing the total down to 1,350,516. Meanwhile, there's been an increase in the net short position for CBOT US 10-year Treasury futures, which has risen by 66,885 contracts to hit 848,052.Speculators have also trimmed their net short position in CBOT US 2-year Treasury futures by 41,775 contracts, bringing the total down to 1,560,837. However, the CBOT US UltraBond Treasury futures saw an uptick in net short positions by 15,470 contracts, reaching a total of 254,464. Similarly, net short positions for CBOT US Treasury bonds futures increased by 5,820 contracts to reach 178,674.
In the equity markets, equity fund speculators have reduced their net short position in the S&P 500 CME by 34,200 contracts, bringing it down to 384,136. At the same time, equity fund managers have cut their net long position in the S&P 500 CME by 50,929 contracts to a total of 1,005,526.
Bitcoin's net long position stands at 2,112 contracts. Meanwhile, the Swiss franc has a net short position of -36,937 contracts, and the British pound is not far behind with a net short position of -64,307 contracts. The euro is holding strong with a net long position of 33,513 contracts, while the Japanese yen finds itself with a significant net short position of -93,905 contracts.
Technical & Trade Views
SP500
Daily VWAP Bullish
Weekly VWAP Bullish
Above 7440 Target 7630
Below 7400 Target 7330
DXY
Daily VWAP Bearish
Weekly VWAP Bullish
Above 98.50 Target 99.50
Below 98.20 Target 96.12
EURUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Above 1.1710 Target 1.18
Below 1.1680 Target 1.1550
GBPUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Above 1.3445 Target 1.3525
Below 1.34 Target 1.3350
USDJPY
Daily VWAP Bullish
Weekly VWAP Bullish
Above 160 Target 161
Below 159.50 Target 157.50
XAUUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 4700 Target 4800
Below 4500 Target 4386
BTCUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 75k Target 80k
Below 74k Target 71k
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Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!