Finance

The US manufacturing sector demonstrated unexpected strength in May 2026, with the ISM Manufacturing PMI rising to 54.0, its highest level since mid-2022. This expansion was likely driven by businesses front-loading orders to mitigate shortages and price spikes caused by the ongoing war with Iran. While production and new orders grew, employment levels in the sector continue to face contractionary pressure.

Crude oil prices surged over 3% on June 1 after reports indicated that a tentative ceasefire between the US and Iran had failed to hold. West Texas Intermediate futures climbed back above $90 per barrel as Israeli military operations intensified in Lebanon and mines were reportedly spotted in the Strait of Hormuz. These developments reversed a brief downward trend in energy costs and reignited concerns regarding global supply security.

Yields on the 10-year US Treasury note rose toward 4.47% as persistent inflation and higher energy costs led investors to price in a potential interest rate hike before year-end. Markets are shifting away from earlier expectations of rate cuts, particularly as core PCE remains elevated at 3.3%. Traders are now focused on the upcoming nonfarm payrolls report to gauge if the labor market is strong enough to support further monetary tightening.