Wednesday’s Expectations of Five Econ Contracts: May 27, 2026

It’s rare to see gross domestic product (GDP) grow in a quarter when corporate profits decline, as the two indicators are strongly correlated. The first three months of the year expanded at a strong 2% annualized rate for GDP, according to a preliminary release, and against this backdrop, there were opportunities in the Interactive Brokers prediction market on Wednesday that, in my view, appeared undervalued. Corporate profits are likely to have been amplified during that time period and have a result well above 0 likely to have been reported on Thursday. Meanwhile, the “Yeses” at -2% and 0% on Wednesday were priced at $0.53 and $0.36. They should have carried heavier prices, in my opinion.

Past performance is not indicative of future results.

PCE Expected Around 3.8%

Thursday’s Personal Consumption Expenditures (PCE) Price Index was largely expected on Wednesday to be up 3.8% year over year. It’s usually a well-telegraphed indicator since many of its inputs are available from inflation releases earlier in the month. In light of its historically subdued deviation rate, the “Yes” at 3.8% was going for $0.24 on Wednesday while the “Yes” at 3.6% and the “No” at 4% were priced at $0.96 and $0.95. Meanwhile, the monthly Reuters poll of 39 forecasters offered some alternative perspectives, as the minimum and maximum projections were 3.7% and 4%, signaling that there was potentially more room for an upside beat rather than a downside miss.

Past performance is not indicative of future results.

Participants Expect an Ongoing Reacceleration

On Wednesday, participants in the Interactive Brokers prediction market believed that the economy will continue reaccelerating. They priced a 68% chance that Thursday’s Dallas Fed figure release of the gauge would exceed its year-to-date average of 2.6%. Meanwhile, there were 36% and 22% odds of a number ahead of 2.8% or 3%. In 20 observations this year, 2.8% has been beat five times while 2.99%, the highest level of the year, was printed last Thursday. Under, the 2.4% “Yes” was at $0.81, a threshold that has been conquered in 15 consecutive weeks. 

Past performance is not indicative of future results.

Layoffs Expected to Be Tempered

Also on Wednesday, layoffs were expected to be tempered in Thursday’s unemployment claims report, as the ongoing economic expansion has been conducive to continued payroll expansions. The Interactive Brokers prediction market anticipated a number around 212k, closely mirroring the monthly Reuters poll of 39 forecasters. Indeed, the survey’s median is 211k, although there were minimum and maximum projections of 200k and 216k. Against this backdrop, prediction market contracts ahead of the Thursday release priced the “Yeses” at 200k and 210k at $0.87 and $0.60, while the “No” at 220k was at $0.90, signaling a narrow range of potential outcomes, relatively speaking.

Past performance is not indicative of future results.

New Home Sales Could Be Flat

New home sales are expected to be flat when released tomorrow as heavy mortgage rates, lofty valuations and challenging affordability conditions weigh on construction activity. In March, 682k seasonally adjusted annualized units were sold; however, the April “Yeses” across the 600k, 650k, 700k and 750k thresholds are priced at $0.86, $0.61, $0.38 and $0.10, indicating a likely outcome around 670k within the Interactive Brokers prediction market. Similarly, the Reuters poll of 42 forecasters carries a median of 665k, amidst minimum and maximum values of 600k and 710k. This indicator is difficult to project and sustains an elevated deviation rate.

Past performance is not indicative of future results.

Source for images: ForecastEx

Note: Prices are highest bids as of the morning of May 27, 2026. 

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