The U.S. trade deficit surged 27.4% to $105.8 billion in May from the prior month, the highest since April 2025 and above expectations for an $85 billion deficit. Exports fell 5.4% to $207.7 billion, led by fewer shipments of crude oil (BZ). Imports grew 3.6% to $313.4 billion as demand for AI infrastructure equipment, including semiconductors and computers, remained robust.
Meanwhile, oil prices continue to fall, despite an Iranian drone strike on a Singapore-flagged ship traveling through the Strait of Hormuz. In a Truth Social post, President Trump clarified that Tehran shot four one-way attack drones at ships, although only one was able to hit its target. “Obviously, this is a foolish violation of our Ceasefire Agreement,” he said.
Elsewhere, the University of Michigan said its Index of Consumer Sentiment clocked in at 49.5 in June, rebounding from an all-time low of 44.8 in May yet remained below expectations of 50. Expected business conditions over the next five years rallied 16% following the U.S.-Iran memorandum of understanding (MOU), which included an extended 60-day ceasefire and reopening of Hormuz.
However, sentiment is still 13% below pre-war levels and nearly 20% lower from a year ago. Rising prices continue to weigh on consumers, with more than half saying basic living costs are straining their finances. Both year-ahead and long-term inflation expectations slipped during the month but remain elevated at 4.6% and 3.3%, respectively.
