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Posted May 27, 2026 at 12:55 pm
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 are potentially undervalued opportunities in the Interactive Brokers prediction market, in my view. I expect that corporate profits will be amplified during that time period and anticipate the results to be well above 0. Meanwhile, the “Yeses” at -2% and 0% are going for $0.53 and $0.36. They should carry heavier prices, in my opinion.
Tomorrow’s Personal Consumption Expenditures (PCE) Price Index is largely expected to come in at 3.8% year over year, and it’s usually a well-telegraphed indicator since many of its inputs are available from inflation releases scheduled earlier in the month. In light of its historically subdued deviation rate, the “Yes” at 3.8% is going for $0.24, while the “Yes” at 3.6% and the “No” at 4% are priced at $0.96 and $0.95. Meanwhile, the monthly Reuters poll of 39 forecasters offers some alternative perspectives, as the minimum and maximum projections are 3.7% and 4%, signaling that there’s potentially more room for an upside beat rather than a downside miss.
Participants in the Interactive Brokers prediction market believe that the economy will continue reaccelerating as there’s a 68% chance that tomorrow’s Dallas Fed figure will exceed its year-to-date average of 2.6%. Meanwhile, there are 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” is at $0.81, a threshold that has been conquered in 15 consecutive weeks.
Layoffs are expected to be tempered in tomorrow’s unemployment claims report, as the ongoing economic expansion is conducive to continued payroll expansions. The Interactive Brokers prediction market anticipates a number around 212k, which closely mirrors the monthly Reuters poll of 39 forecasters. Indeed, the survey’s median is 211k, although there are minimum and maximum projections of 200k and 216k. Against this backdrop, prediction market contracts ahead of tomorrow’s release price the “Yeses” at 200k and 210k at $0.87 and $0.60, while the “No” at 220k is at $0.90, signaling a narrow range of potential outcomes, relatively speaking.
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.
Source for images: ForecastEx
Note: Prices are highest bids as of the morning of May 27, 2026.
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This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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