May 2026 Trading Outlook: Fiscal Flows, Oil, Bank Credit, And Fed Interest Rates

The article warns that fiscal and credit impulses are drying up, pointing to a hard landing and a severe liquidity drought for risk assets in 2026-2027. April's private sector deficit was -$111B, while record federal outlays are seen as only temporary support, with tax refunds and Treasury payments likely to cushion markets near term before a potential equity pullback. The message is broadly risk-off and implies meaningful market-wide downside for equities and other risk assets.

Analysis

The article warns that fiscal and credit impulses are drying up, pointing to a hard landing and a severe liquidity drought for risk assets in 2026-2027. April's private sector deficit was -$111B, while record federal outlays are seen as only temporary support, with tax refunds and Treasury payments likely to cushion markets near term before a potential equity pullback. The message is broadly risk-off and implies meaningful market-wide downside for equities and other risk assets.