Decoding May’s market signals: The calm, the cracks, and the catalysts

The past month largely reinforced existing trends across currency and bond markets, with volatility remaining subdued overall. The clearest exception came from the technology sector, where several sharp moves lifted both individual names and the Nasdaq more broadly. While tensions in the Middle East continued to act as a persistent background risk without any immediate resolution, investor focus shifted back toward the US earnings season.

Earnings from major US technology companies came in notably strong. At the same time, the equal-weighted S&P 500 remained largely flat, suggesting that overall market breadth stayed relatively constrained. In effect, index gains continued to be driven primarily by the dominance of the technology sector, while metals and crypto did not follow the same trajectory. Gold came under pressure for most of the period, while Bitcoin maintained a modestly bullish tone.

S&P500 index vs SPXEW (Equally weighted SP&500 index). Source: Tradingview.com

Among individual equities, Intel emerged as one of the standout performers, posting a sharp price gap followed by a sustained upward move. This reinforced the market’s shift in focus toward corporate earnings rather than geopolitical developments in the Middle East. Within that broader rally, semiconductor stocks were the strongest-performing segment in April.

The Fed and Kevin Warsh

The appointment of Warsh to a leadership position might bring new narratives to currency and bond markets, which stagnated due to absence of driving factors. Yields of 30-year treasury bonds cemented below %5 watermark, showing the reluctance of investors for change in the interest rate space.

The Fed’s decision with Jerome Powell’s press-conference hasn’t brought any surprises, and the rate for the US stayed unchanged at 3.5 – 3.75% level, with the majority of traders expecting it to stay there until the year end.

According to the SOFR indicator from CMEGroup, futures for interest rates start reflect expectations of traders for interest rates of 3.75% for December 2026, and gets close to 4% for March.

SOFR watch. Source: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Overall, the appointment of Kevin Warsh hasn’t given any clues to the market, and Jerome Powell will continue being Fed’s chief until May 15, 2026. The market first needs to hear his rethorics and figure out the agenda that he will offer to the financial markets. Some analysts assume him bringing a hawkish tone to the Fed, some will think that he will align with president Trump’s agenda who claimed several times that interest rates are too high.

Global Rate Dynamics: EU and Japan

While the Federal Reserve remains the primary focus for most market participants, other central banks make their moves:

European Union (ECB): Contrary to earlier expectations of a smooth easing path, the ECB has recently sent signals regarding a potential “hawkish” pivot or even a rate hike reinforcement.

Despite some cooling in headline inflation, persistent price pressures in the services sector and a tight labor market have kept policymakers on edge. This shift suggests that the “higher for longer” narrative is not exclusive to the US, potentially providing a floor for the Euro while putting additional pressure on EU sovereign bond yields.

Japan (BoJ): Japan continues to be the “wildcard” of the current season. After decades of ultra-loose monetary policy, the Bank of Japan (BoJ) is signaling a potential pivot toward further rate hikes to prevent the persistent weakness of the Yen. This time, BOJ supposedly made an intervention during the first week of May, ahead of banking holidays in Japan.

JPY Verbal Intervention Search Trend Index. Source: https://en.macromicro.me/charts/87300/japan-jpy-verbal-intervention-search-trend-index

The verbal intervention search trend index has grown towards the previous peak, meaning that the central bank is seriously concerned about weakening of the Yen and ready to take more actions. At the same time, BOJ aims to comply with IMF rules, which include 3 interventions per six months period to maintain the status of the Yen as “free floating” currency. Thus, further interventions are questionable, but BOJ still has capacity to make two interventions more within the 2nd quarter.

Possible trends for May:

May is known as a possible peak for bullish trends for indices, driving narratives for the equity market usually dry up as the earnings season is over, and the market prepares for the next earning season amid economic slowdown in summer.

The increased consumption of energy products rises in summer whereas May is considered an intermediary month.

Rotation to metals:

When stock indices will peak, the next possible group of markets to grow might be metals, as Gold was struggling along with Silver, Platinum and Palladium in Q1, 2026.

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Now let’s dive deeper into the performance of Gold, Crude oil and S&P500 index and try to highlight possible development of mentioned assets for the upcoming month.

Gold

As of publishing the report, Gold is locked in a consolidation between 4500 and 4750 – 4800 price area moving in a widening formation, with the overall trend of declining volatility. Metals have been struggling after establishing new all-time-highs in the first quarter of 2026.

That is a typical situation for Gold: it tends to lock in lengthy consolidations after new peaks both for price and volatility. If the macro landscape doesn’t change, Gold might continue moving in the sideway direction before June-July of 2026. According to seasonal historical studies, the biggest moves for Gold start from August and last until mid October. Thus, short-term swing trades for Gold would be a preference.

Though, there’s still a possibility of rotation of a bull market from stocks to metals: if that happens, Gold may break the upper side of its widening formation at 4800 and move higher. That might be considered as less favorable scenario

XAUUSD, D1. Source: Exness.com

Crude oil

Volatility for Crude oil is extremely high, and it fluctuates along with news from the Hormuz straight, which comes every day. According to the Hormuz Straight Monitor, The war risk premium for cargo insurance has reached 3.5%,  whereas the normal level is usually 0.15%

USOIL, D1. Source: Exness.com

Thus, there’s a noticeable bullish pressure for oil futures, and the possibility of achieving another peak for the price looks like a realistic scenario. According to STEO forecast from eia.gov, WTI oil futures (USOIL) are expected to reach $115 per barrel before initiating the decline. Thus our preference remains to be bullish for the upcoming month before reaching the $110 – 115 area.

Noteworthy, Crude oil is very volatile and highly dependent on the geopolitical situation and the situation might shift rapidly.

US500

S&P 500 displays mixed performance. The technological sector, which occupies around 30-35% of the index, drives it higher, whereas the equally weighted S&P 500 index (which might be visible as SPXEW) is moving sideways with neutral market breadth.

Now the index moves in the ascending channel and leans to the upper side of it, but still below the upper band of the Bollinger Bands. The rally is still fragile, but should the price touch the higher border of Bollinger Bands, probabilities may shift for establishing yet another peak, after which it might consolidate again.

US500, daily chart. Source: Exness.com

In a market where the near-term supply is determined by political and regulatory access rather than production capacity, traders relying on traditional supply-and-demand models risk being systematically caught off guard.

When access conditions shift quickly, oil can reprice in short, uneven bursts, leaving less room between identifying a move and acting on it. Understanding the move is one thing. Acting on it under real market conditions is another.

This is where Exness becomes relevant. In oil markets driven by geopolitical signals, execution consistency becomes part of risk control. Crude, alongside gold and commodity-linked currency pairs, can react sharply to macro triggers, and trading conditions often shift at the same time as price. Spreads are not just a cost but part of trade quality, and when they become less stable, even a correct view can lose precision at the point of execution. This is why Exness fits naturally into this discussion: in markets shaped by access risk and rapid repricing, infrastructure helps determine whether insight can actually be translated into a usable trade.

Extra opinion from the author

When oil markets are driven by conditional supply, the real cost of trading is no longer defined by direction alone. Traders may correctly anticipate a shift in supply access, yet still lose part of the edge if slippage, spread behavior, or execution consistency deteriorate at the same time. In fast-moving conditions, even small variations in fill quality can affect the outcome of a trade.

This is where Exness belongs in this conversation. In environments where geopolitical signals trigger rapid repricing across oil and related markets, execution quality becomes part of how risk is managed in practice. If spreads remain more stable and fills remain more precise during active sessions, traders are better positioned to act on their view without introducing friction at the point of entry or exit.