US consumer sentiment hits fresh record low in May

The University of Michigan's preliminary May consumer sentiment index fell well below economists' expectations to a fresh record low. The chief driver was the climb in gasoline and energy prices since the start of the Iran war, with the current-conditions sub-index also dropping sharply from April.

The expectations component sank to its weakest level since the survey began in 1978. A clear majority of respondents said they expect their incomes to fall over the coming year or that they fear losing their jobs. One-year inflation expectations jumped to 6.5%, the highest reading since 1981.

Taken together with Friday's strong April nonfarm payrolls, the data hand the Federal Reserve a tricky picture. The labour market is holding up while the cost of living is grinding household morale lower. Investors are now pricing the first rate cut later in the year, with September or beyond increasingly seen as the realistic window.