US consumer confidence rebounded sharply in May from an almost five-year low as perceptions of the economy and labor market improved as the Trump administration backed down from more extreme tariffs and tariff threats. The Conference Board’s gauge of confidence increased by 12.3 points to 98, marking the biggest monthly gain in four years. The figure exceeded all estimates in a Bloomberg survey of economists. 

A gauge of consumer expectations for the next six months surged by the most since 2011, while a measure of present conditions climbed as well, data released Tuesday showed. The improvement in confidence was broad across age, income groups and political affiliations, with the strongest gains among Republicans.

The cutoff for the survey was May 19, after the US and China agreed to temporarily reduce massive levies on each other’s goods while negotiating a trade deal. About half of the responses were collected after the agreement was reached on May 12.

President Donald Trump’s trade war has been exceedingly unpopular with Americans, data since his inauguration has shown. The gauge’s improvement adds support to critics of the administration who contend the trade war, if allowed to continue, could kneecap consumer spending. And while Trump has made more threats and reversals since the survey, a European Union agreement Monday to accelerate negotiations with the US may come as a comfort to worried consumers. —Jordan Parker Erb

What You Need to Know Today

Wall Street kicked off the shortened week with a rally thanks to that consumer confidence data and prospects of US-European Union trade talks. A global surge in bonds also helped sentiment. As equities halted a four-day slide, the S&P 500 climbed 2%. Treasuries got a boost, pushing the 30-year yield below 5% on signs Japan will be ready to calm debt markets. The moves in the US extended after a sale of two-year notes was met with solid bidding metrics. The dollar rose against all developed-market currencies. Here’s your markets wrap.

Last year, after delaying Trump’s prosecution for allegedly attempting to overthrow the democratic election of Joe Biden in 2020, the US Supreme Court severely limited the ability of the Special Counsel to prosecute the case. But in doing so, the Republican-appointee controlled court effectively immunized presidents from criminal prosecution for most actions it deems related to their job. It was seen as a tectonic shift in power that effectively left impeachment, except possibly in the most extreme of circumstances, as the only way to bring a misbehaving president to heel.

Last week, the court made a similarly historic leap—albeit much more quietly—in the direction of what’s called the “unitary executive theory.” While much of the financial media focused on the court’s effort to distinguish the independence of the Federal Reserve from other federal agencies, the supermajority allowed Trump’s firings of ostensibly independent consumer and financial watchdogs to stand as they pursue lawsuits. Though not a final ruling on the merits, such decisions often telegraph an ultimate ruling, which in this case would again broadly expand the power of the executive branch.

Dutch pension fund PME is issuing a blanket warning to US money managers amid concerns America’s investment industry is caving to pressure from the Trump administration to abandon basic principles of stewardship. They “aren’t condemning what Trump is doing and how he is operating and how he is handling issues like climate change and demolishing the judiciary,” said Daan Spaargaren, senior strategist for responsible investing. “We are worried about that.” PME, with assets under management of about €57 billion ($65 billion), is the latest European pension fund to express such concerns as Trump’s policies implicate the financial industry.

Long before Trump returned to the White House, intense pressure from the Republican Party and the fossil fuel industry had seen much of Wall Street publicly retreat from commitments aimed at sustainability and fighting climate change. Earlier this year, State Street lost mandates in Scandinavia and the UK after it withdrew from a major climate alliance for the industry. PME has already made clear it’s reviewing a €5 billion mandate with BlackRock after it quit a key net-zero coalition.

One of Europe’s biggest asset managers has also expressed growing concern that Republican efforts to gut legislation supporting key industries such as clean energy may result in the US losing its status as a destination for investor capital. “For investors, the message is clear: The US may no longer offer the reliable investment runway it did just months ago,” said Alex Bibani, a London-based senior portfolio manager at Allianz Global Investors, which oversees some $650 billion in assets.

HSBC fired more than two dozen analysts as it embarks on one of the biggest restructurings of a Wall Street research department in recent years. Most of the terminations were in Europe, though it’s said they also include Steven Major, HSBC’s Dubai-based global head of fixed income research. As part of the moves, the bank is combining macro strategy across asset classes including foreign exchange and fixed income. HSBC has historically had one of the most comprehensive research outfits on Wall Street, with more than 330 analysts and associates before the recent cuts. 

The US government is poised to receive a so-called golden share in United States Steel as a condition for approving Nippon Steel’s proposed acquisition of the American company. The plan, which would give the government de facto veto rights on certain company decisions, is the latest twist in a proposed deal that’s remained in limbo for nearly a year and a half. On Friday, Trump announced a “partnership” that included $14 billion in new investments. Still unclear are the scope of such veto powers and what the administration has decided regarding the existing $14.1 billion merger agreement. The deal put forward to the Committee on Foreign Investment in the US and to Trump included the original $55-per-share acquisition in addition to the further $14 billion investment.

The US government is set to receive a so-called golden share in United States Steel. Photographer: Justin Merriman/Bloomberg

Blackstone agreed to buy $5 billion of private equity holdings from the New York City pension system, one of the largest sales of its kind. The transaction, which represented 450 individual commitments in 125 funds from 75 different managers, is for “portfolio strategic realignment” purposes, not liquidity needs, according to a statement from the New York City Comptroller’s office. New York City reported private equity investment returns of between 4% and 5% for fiscal year 2024 across the funds that make up the pension system. By comparison, the California Public Employees’ Retirement System and the California State Teachers Retirement System reported private equity returns of 10.9% and 8.6%, respectively, for the same period.

What You’ll Need to Know Tomorrow

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