U.S. Consumer Sentiment Falls to Record Low in May

The University of Michigan's consumer sentiment index fell to 44.8 in May, down from a preliminary 48.2 and from 49.8 at the end of April. The decline marks the third consecutive monthly drop and places the reading just below the previous low recorded in June 2022.

One-year inflation expectations increased to 4.8 percent from 4.7 percent the prior month, well above the 3.4 percent level seen in February before the war began. Longer-term inflation expectations rose to 3.9 percent from 3.5 percent in April. Surveys of Consumers Director Joanne Hsu said consumers appear worried that inflation will increase and spread beyond fuel prices even in the long run.

Markets worldwide have shown volatility as investors assess how long the conflict could last and how elevated oil prices will affect the economy. The 30-year Treasury bond yield reached its highest level since before the financial crisis, while the 10-year note yield touched levels not seen in more than a year.

The Federal Reserve has signaled reduced willingness to lower interest rates amid the inflationary pressures.