Investors returned from the Memorial Day long weekend cheering President Donald Trump’s decision to postpone 50 percent tariffs on the European Union.
While the leading stock market benchmark averages remain in the red this year, they have rebounded by as much as 8 percent over the past month.
In a May 23 post on Truth Social, the president stated that he would impose a 50 percent tariff on the European Union because trade negotiations were “going nowhere.” However, he confirmed on May 25 that he would delay the levy deadline for the 27-member trade bloc to July 9, following a request from European Commission President Ursula von der Leyen.
Traders’ optimism intensified after National Economic Council director Kevin Hassett hinted that “a few more” trade agreements could be announced this week.
He also suggested that India is “on the list of close to the finish line.”
Bond yields, meanwhile, were mixed to kick off the holiday-shortened trading week.
Long-term interest rates surged in May, with the 20- and 30-year Treasury yields climbing approximately 30 basis points since the start of the month.
Financial markets are facing a series of headwinds, from a tariff-fueled economic slowdown to the potential for the Federal Reserve to pause interest rate cuts this year, says Tom Essaye, the president and co-founder of the Sevens Research Report.
Federal Reserve and Inflation in Focus
Investors will scrutinize the minutes from this month’s Fed policy meeting, which could provide deeper insight into the thoughts of monetary officials. They will be published on May 28.The Fed kept interest rates unchanged this month for the third consecutive month, leaving the benchmark policy rate at a range of 4.25–4.50 percent.
Recent headline numbers indicate that the inflation flame has yet to be rekindled. However, according to Apollo chief economist Torsten Slok, consensus inflation expectations have been steadily rising.
“Inflation has for several years been moving down toward the Fed’s 2 percent inflation target. But the consensus now expects inflation to rise over the coming quarters, driven by tariffs and by upward pressure on housing inflation,” Slok said in a note emailed to The Epoch Times.

In April, the U.S. annual inflation rate slowed to 2.3 percent, the lowest in more than four years. The producer price index, a measure of potential pipeline inflation, fell by 0.5 percent last month.
The rate-setting Federal Open Market Committee will hold its next two-day policy meeting on June 17–18.
In addition, the second estimate for the first-quarter GDP growth rate will be released on May 29. In the first three months of 2025, the U.S. economy contracted by 0.3 percent, and the consensus forecast indicates that there will be no substantial revisions to the reading.
“There will not likely be a significant change to the 1Q25 result coming in this second release,” Lauren Saidel-Baker, an economist at ITR Economics, said in a note emailed to The Epoch Times.
“We know that imports surged and that government spending was down slightly. Whether the exact contribution of consumer spending, business investment, and exports come slightly closer or farther from offsetting these factors does not change that underlying conclusion.”