WTI crude oil futures fell to $94.4 per barrel on Tuesday, after a small increase on Friday. Fresh tensions between the US and Iran clouded hopes for an interim agreement to reopen the Strait of Hormuz. Recent clashes included US strikes near the strait, while reports indicated the US Navy has resumed escorting tankers through the area. Iran’s Revolutionary Guard also claimed it fired at an F 35 fighter jet and several drones after they entered Iranian airspace. The developments come as negotiations continue to end a conflict that has disrupted global energy markets. Secretary of State Marco Rubio said talks may take several more days as both sides work on the wording of an initial agreement. Oil prices, which surged in March and April, are now on track for a monthly decline as markets weigh the fragile ceasefire and possible reopening of Hormuz against rapidly tightening global inventories.

US natural gas futures rose around 2% to $2.96 per MMBtu as producers reduced output over the US holiday weekend and more domestic supply was redirected to LNG export terminals along the Gulf Coast. Estimated gas flows to LNG facilities reached about 18.4 billion cubic feet per day on Tuesday, up nearly 9% from the previous week, as several export plants returned from seasonal maintenance that had temporarily redirected supply into the domestic market. Average gas production in the Lower 48 states slipped to 109.4 billion cubic feet per day so far in May, down from 109.8 billion in April. Lower output and firmer demand in recent weeks likely reduced the storage surplus to around 6% above normal, compared with roughly 7% the week before. However, below average temperatures are expected across California through May 30 and in the Eastern US from May 31 to June 4, potentially reducing air conditioning demand and allowing more gas to flow into storage.

The S&P Cotality Case-Shiller 20-City Home Price Index rose just 0.8% year-over-year in March 2026, easing from 0.9% in February and falling short of market expectations for a 1.0% increase. It was the weakest annual increase since July 2023, adding to evidence of a cooling US housing market. For the tenth straight month, inflation outpaced home price growth, continuing to erode inflation-adjusted housing wealth. Regional divergence also persisted, with Midwest and Northeast cities outperforming while many Sun Belt and Western markets remained under pressure. Chicago led annual price gains with a 6.1% increase, followed by New York at 4.0% and Cleveland at 3.0%. On the downside, Seattle recorded the steepest annual decline at –2.5%. Other weak performers included Denver (–2.0%), Tampa (–1.9%), Dallas (–1.7%), and Phoenix (–1.6%). Even traditionally resilient markets such as Los Angeles (–1.6%) and Washington (–0.1%) slipped into negative territory.

The Chicago Fed National Activity Index (CFNAI) rose to +0.14 in April 2026 from a revised –0.15 in March, marking its strongest reading since March 2025. The rebound pointed to improving economic momentum, driven largely by a sharp recovery in production activity. Two of the four broad categories used to construct the index improved from the previous month, while two categories made positive contributions overall in April. Production-related indicators added +0.18 (up from –0.13 in March), and sales, orders, and inventories contributed +0.02 (up from –0.03). Employment-related indicators subtracted –0.02 (down from neutral in March), and personal consumption and housing subtracted –0.04 (also down from neutral).

The yield on the US 10-year Treasury note fell about 6 basis points to 4.5% on Tuesday, as investors returned from the long weekend and remained cautiously optimistic that the US and Iran could still reach a near-term agreement, despite recent military strikes and ongoing mixed signals from both sides. Attention is also focused on the Fed’s policy outlook, with markets reassessing expectations for interest rates after the surge in oil prices fuelled inflation concerns. Traders are now pricing in an 80% probability of a rate hike by December, a significant reversal from earlier expectations of two 25bps cuts prior to the US and Iran. The upcoming PCE inflation report, the Fed’s preferred gauge of price pressures, will provide further clarity on the inflation trajectory and the central bank’s likely policy response.

The CBI retail sales balance improved to -46 in May 2026 from -68 in April, beating market expectations of -60, with retailers expecting a further moderation to -36 next month. Sales remained below seasonal norms and demand stayed weak, while retail sentiment remained negative for a second straight year despite a slower deterioration than in previous quarters. Retail selling price inflation eased to its slowest pace since February 2025, with the balance falling to 28 from 41. Retailers also signalled further cuts to investment and hiring plans, with capital expenditure expectations falling to their weakest level since February 2025. Employment in the sector continued to decline, although at a slower pace. CBI economist Charlotte Dendy said the slowdown in price growth highlights weak consumer demand and warned that firms continue to face pressure from high operating costs, while calling for business rates reform, lower energy costs and reduced regulatory burdens to support the sector.