EARL grinds higher, Equity futures fall and bonds MIXED / UNCH ‘ish

… AND only a few thoughts …

Bond markets have been volatile overnight … early weakness has been greeted by some stability and the curve remains topical as front end comfortably above 4.00% as 10s, bonds changing hands 4.60% and 5.13 …

5yy DAILY (bars): 4.30 (o/n) 4.25 and 4.20 (TLINE) …

… with momentum (stochastics) now firmly overSOLD (#DipOrTunity) …

#Got5s? NOT any sort of investment or trading recommendation — ever — am just stuck using my boring old tools and as they flash a signal, well, a short-term rental opportunity may be near.

Moving along I’ll admit to NOT having much more on my mind at this early hour other than continuing to try and stay on top of events in the Persian Excursion. I’ve done a good bit of searching for something regarding SEASONALS and initially, HERE is what i’ve found …

March 29, 2021
GUGG: Don’t Look Now, But Bond Seasonality Is Turning Bullish
The summer months tend to deliver stronger-than-average returns for bonds.

…The chart below shows the monthly change in 10-year Treasury yields relative to the trend of each year. After all, a 10 basis point monthly decline in yields wouldn’t tell you much about seasonality in a year that saw yields decline 120 basis points. Focusing on data during the 2010-2019 expansion (to avoid recession distortions), we find that 10-year yields tended to rise during the September-March period and fall during the April-August period, relative to the trend of each year…

… Ok then … clearly any sort of SEASONAL considerations meet the idea of ‘its different this time’ and, well, sure. It may very well be. It’s ALWAYS a bit nuanced and markets confront their own current set of facts. Covid. Hanta. Now ebola??

Whatever the case MAY be, we all follow technicals and longer-term AVERAGES in the case there is some sort of mean reversion — well, we know what we’re reverting too.

In this case, with impending heat wave here in the NE, I’m reminded about the summer months being very friendly for BONDS … make of that what you will.

I’ll hand the rest over to my BondBot intern and get OUT the way …

Bonds Finally Remembered Oil Exists

Treasuries opened Sunday night like they’d seen a ghost ship in Hormuz. The 10-year hit 4.63%, 30s flirted back above 5.10%, and 2s pushed toward 4.35% as Brent ripped through $110 on fresh Iran chaos, UAE strike headlines, and another weekend of “peace talks” that looked suspiciously like hostage negotiations with WiFi. Stocks wobbled, futures slipped, then dip-buyers arrived right on schedule because apparently every geopolitical crisis is now an AI buying opportunity ahead of NVIDIA earnings Wednesday. FedWatch has gone from “cuts are coming” to “maybe hikes aren’t dead,” which is what happens when oil becomes monetary policy. For everyday Americans: higher gas, higher mortgages, higher anxiety. Wall Street’s new inflation model is apparently just “check crude futures and pray.”

… NOT it’s best work but it’s nearly a summer Monday so we’re just gonna roll with it…

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 705a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 18 May 2026

• NEWSQUAWK US Market Open: Brent pulls back from $112/bbl as Trump warns Iran, USTs hit fresh contract low, Equites lower … Fixed income benchmarks rebound, in synchrony with energy downside … USTs hit a 108-30 trough, a fresh contract low, in the early hours. Since, and particularly after remarks from the Iranian Foreign Ministry spokesperson, energy benchmarks have eased off, which has allowed fixed to lift, taking USTs to a 109-08 high with gains of one tick on the session. Today’s US docket is quiet, but the week is busy with Nvidia due before the FOMC Minutes and a 20yr auction. From the Minutes, the last with Powell as Chair, BofA expects the account to “reinforce the Fed’s recent hawkish tone”, showing that Warsh will inherit a Fed with “little appetite to cut”.

• Reuters Morning Bid: Bonds spoil the AI party

…Today’s key chart

Graphics are produced by Reuters.

G7 finance ministers acknowledged mounting concern over public debt and bond market volatility as they met in Paris on Monday in the wake of a bond market selloff triggered by fears over inflation risks from the Iran war.

The implied borrowing costs derived from indexes of G7 government bonds with maturities of 10 years or longer have risen to their highest in 24 years over the past week, with 30-year U.S. Treasury yields hitting their loftiest levels since before the banking crash of 2007-08…

• Reuters: Bonds get a taste of oil’s demand destruction

• Yield Hunting Weekly Commentary | May 17, 2026 | BANX NAV, PSF/FT Buy, BDCs

• Yield Hunting Daily Note | May 15, 2026 | Big Putnam Muni Raise, MCI/MPV Update

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use …

THE bank of OUR land offered a weekly rates note over weekend and worth consideration … I’ve been outta pocket (sorry for ‘excuse’) and missed idea here to be ‘tactically SHORT front-end’ while at same time, 10s breaking 4.50 so throw them rocks into the wettest paper bag, lean on UPSIDE here, too … NOTE the ‘double top’ risk as it would seem that ship sailed …

15 May 2026
BAML Global Rates Weekly
NACHO rates

The View: NACHO rates & inflation kryptonite
NACHO = Not A Chance Hormuz Opens. NACHO rates = pay US front end & Jun ’26 SONIA, long 10Y bund outright & vs 10Y UST. Inflation kryptonite can deter bond demand

Rates: Inflation beats
US: Inflation beats & higher oil point to underpriced hike risk; positioning is a headwind; we recommend 2y short and 2y5y flattener…

…After our US economics team shifted two cuts from ’26 into ’27, we revised forecasts higher for 2y and 5y yields through 1H ’27 (Exhibit 2, see: Liquid Insight). End-’27 forecasts and the terminal rate are unchanged. Near-term, our front-end forecasts sit slightly above forwards; from Q4 ’26 onward, they fall well below. We are also below forwards across 10–30y from Q4 into early next year. This reflects flattening pressure from tighter financial conditions under a more hawkish Fed. Risks to rates remain skewed higher, with growing hike risk.

We recap views: duration—tactically short 2y given strong labor and geopolitical risks; curve—2s5s flattener, 5s30s steepener; inflation—long 5y real rates on stagflation risk, closed 5y5y inflation longs; spreads—short June ’26 and long Dec ’26 SOFR/FF; vol—short left vs right, long forward vol via receiver calendars, and backend steepeners…

…Technicals: US 10Y yield’s new YTD high favors upside
US 10Y yield saw new highs this week (4.50%) in line with our uptrend bias to 4.57% / 4.78%. There is still some risk of a 4.20-4.50% trading range or double top

Fed on HOLD and a CUT in 2027 (Q1) but … A hike in this calendar year? What might cause it …

18 May 2026
Barclays Federal Reserve Commentary: What would trigger a 2026 Fed hike?

Although baseline forecasts do not include Fed hikes this year, risks of a hawkish pivot have risen. We outline scenarios that could force an FOMC response and the indicators to watch.

• With commodity price pressures rising amid the Strait of Hormuz blockage and AI-related capex straining parts of the global supply chain, risks of a hawkish Fed turn have clearly intensified. While consensus economist baselines do not include hikes, markets have taken notice, with pricing for a hike by December 2026 now exceeding 60%.

• Although our baseline also does not anticipate hikes through end-2027, we agree that upside risks to the policy rate have intensified. This note outlines the main scenarios under which the FOMC could contemplate hikes as the next policy move and the indicators to watch.

• In our view, three (potentially overlapping) scenarios could trigger hikes, listed in order of likelihood:

  • Evidence that longer-term inflation expectations are becoming unmoored, particularly in 5–10y market-based measures;

  • Core inflation persistently running faster than its target-consistent pace, even as tariff-related pressures fade, especially in core PCE;

  • Signs that demand is outpacing supply, growth exceeding potential, consumer spending re-accelerating, unemployment falling below NAIRU and wage growth picking up.

• The first two scenarios would likely be closely tied to the duration of supply-side disruptions linked to the Iran conflict. The third is more firmly rooted in domestic demand dynamics, particularly the AI investment cycle and associated wealth effects, which may materialize ahead of expected productivity gains and cost efficiencies.

• We retain our baseline of an extended hold, followed by a 25bp cut in March 2027, contingent on a near-term resolution of the Strait of Hormuz disruption and a deceleration in consumer spending. While hiking risks have come into clearer view, we regard a delayed rate cut scenario as somewhat more likely.

• We attribute the following subjective probabilities of alternative scenarios: 35% chance on our baseline scenario of a 25bp rate cut in 2027; 30% chance of an unchanged policy rate through end 2027, assuming continued solid demand growth but moderating inflation; 25% probability of a rate-hike scenario featuring continued solid growth and elevated inflation; 10% probability of a recession scenario that requires sharp rate cuts.

Ceasefire longer than the ‘kinetic’ phase now …

18 May 2026
DB: Early Morning Reid

…Moving onto more serious matters, the Iran war is 80 days old as of today, with no obvious end in sight, whilst the Strait of Hormuz remains closed. Notably though, the truce and ceasefire period (41 days) has now lasted longer than the initial kinetic phase (39 days). While an end to the ceasefire clearly cannot be ruled out, the fact this stalemate has persisted for so long suggests the US would prefer to avoid that route, given the political and economic consequences—particularly the political ones in an election year. As a result, the tense stalemate continues…

…For markets, the ongoing closure of the Strait of Hormuz and the prospect of a fresh escalation has pushed oil prices higher this morning. So Brent crude is up +1.77% to a two-week high of $111.19/bbl. And it’s clear that investors are pricing in a more protracted conflict, as the 6-month brent future is also up to $92.14/bbl this morning, which would be its highest closing level since the conflict began.

Those oil moves have exacerbated fears about a stagflationary shock, which has pushed global bond yields even higher this morning. For instance, the 10yr Treasury yield (+3.2bps) is now up to 4.63%, its highest level in the last year, whilst the 30yr yield (+3.4bps) is up to 5.15%, which would be another post-2007 high. It’s a similar story in Japan this morning, where the 10yr JGB yield (+4.8bps) is up to 2.75%, a level last seen in 1997, and the 30yr yield (+9.3bps) is up to 4.11%, the highest since that maturity was first issued in 1999. That also follows comments from PM Takaichi, who said she’d asked the finance minister “to consider ways of funding including compiling a supplementary budget”. Indeed, Reuters reported the government was likely to issue fresh debt to fund part of it…

CALLING ALL MUPPETS …

15 May 2026 | 9:05PM BST
Goldman Sachs: GLOBAL RATES TRADER
Rates Running Out of Patience

Supply-side volatility and uncertainty around the conflict continue to challenge global duration’s usefulness. The introduction of some inflation risk into the UST curve—a feature that was absent earlier in the shock—and optimism priced into macro markets improve the value of duration as a medium-term hedge against the deeper downside tails. But with any near-term rally likely gradual in a benign deescalation scenario, or reliant first on a more adverse outcome for energy prices from the conflict that reignites growth concerns, we continue to see value to structures that limit downside in further selloffs…

…United States and Canada
Peer pressures. The break above 4.5% 10y and 5.0% 30y US yields has come against a backdrop of higher yields globally, with UK, Japan, and German long-end yields trending steadily higher—compared to the last time UST 30y yields exceeded 5% in 3Q25, the average of UK, Japan, and German 30s has risen about 50bp (Exhibit 1). Our estimate of global spillovers suggests that the year-to-date selloff in USTs has largely reflected bearish shocks from the UK and Japan. We are hesitant to write off domestic impulses entirely though, as the pairing of growth optimism and inflation upside risks have converged to erode market conviction in the likelihood of Fed cuts—a building sense of on hold (or higher) for longer front-end yields should shift the perception of what level offers attractive value further out the curve as well. Instead, we would interpret the global nature of the bearish pressure as underscoring the near-term challenges to achieving lasting relief without a shift in the macro picture—despite idiosyncratic factors, the paths to a meaningful rally in the UK and Japan hinge primarily on outcomes that either restore conviction in the path towards lower policy rates (for the UK) or validate the gradual approach to tightening (for Japan).

An uneasy introduction of value. Treasuries have been a poor diversifier since the end of February—the one-month rolling correlation between 10y UST yield changes and equity returns reached its most negative in multiple decades (Exhibit 2). Continued uncertainty around the Iran conflict and supply shock remains an impediment to nominal duration’s ability to dampen day-to-day portfolio volatility, which can sustain greater risk premium in the short term. However, the broader trends of growth optimism priced into risk markets and clearer build-up of inflation risk premia along the yield curve (more below) improves the value proposition of Treasuries as a medium-term hedge. Given the possibility that it takes a more acute spike in energy prices to reopen growth worries in the short term, we think expressions that lean bullish while limiting exposure to additional selloffs are a prudent implementation for now and would look either for deeper selloffs that more durably challenge the risk asset trend, or credible relief and a return of energy flows as catalysts to add to long duration exposure.

Over the weekend, a few positive economic thoughts and a few EQUITY thoughts ‘from the road’ …

May 18, 2026
MS Weekly Warm-up: Thoughts from the Road

We have high conviction in our earnings recovery/broadening thesis, and accelerating EPS revisions breadth supports our view. Despite the resilient earnings data across sectors, many investors remain hesitant to add cyclical exposure outside of Semis. Rates/liquidity remain a real near-term risk.

Last Wednesday, We Published Our Mid-Year Outlook...We raised our next twelve month (mid 2027) S&P 500 price target to 8,300 driven by strong earnings—16% annualized EPS growth through our forecast horizon (2x the long-term median). Under the surface, we prefer Industrials, the hyperscalers, Financials, and Discretionary Goods. Our year-end 2026 price target moved up from 7,800 to 8,000. Our outlook builds on three themes we have emphasized since last year: running the economy/earnings cycle hot, public to private rebalancing, and a broadening of earnings and performance. Bottom line, this is an earnings story, not a multiple expansion one…

…Watching Rates...For the last several weeks, we have been pointing out the significantly negative (-0.8) correlation between equity returns and change in bond yields. We’ve also flagged the importance of the 4.50% level on the 10-year yield as the point at which rates could serve as more of a noticeable headwind for equity multiples. Friday’s price action lends itself to that view. On the positive side, bond volatility has remained relatively contained despite the move higher in yields. Further, as we’ve written over the last several months, the Treasury and Fed are likely to work together through RMPs, front-end issuance and buybacks to keep bond volatility contained. At the end of the day, the rate move higher and hawkish shift in the Fed’s tone is largely attributable to the oil spike and an economy that is running hot. As such, we may need to see a more durable resolution in the conflict before yields fall. If bond vol rises with rising back end rates, we would expect the first meaningful correction in equity prices since markets bottomed at the end of March.

…For the last several weeks, we have been pointing out the significantly negative (-0.8) correlation between equity returns and change in bond yields. We've also flagged the importance of the 4.50% level on the 10-year yield as the point at which rates could serve as more of a noticeable risk for equity multiples. Friday's price action lends itself to that view. On the positive side, bond volatility has remained relatively contained despite the move higher in yields. Further, as we've written over the last several months, the Treasury and Fed are likely to work together through RMPs, front-end issuance and buybacks to keep bond volatility contained. At the end of the day, the rate move higher and hawkish shift in the Fed's tone is largely attributable to the oil price spike. As such, we likely need to see oil prices and bond yields come down a bit to accelerate the broadening trade even though fundamentally, the backdrop is already supportive of this development.

Exhibit 4: Short-Term Stock/Yield Correlation Is Negative—Rate Sensitivity High for Stocks

Exhibit 5: 4.50% Has Been An Important Level As A Breach Above Has Led to Multiple Compression Historically—Worth Watching from a Risk Standpoint

…Last week, we published our Mid-Year outlook. For those looking for the 2-minute version:

We’re took our forward 12-month (mid-2027) price target up to 8300. That’s 20.5x forward EPS of $404. Our year-end 2026 price target moved up from 7800 to 8000. The main messages here are:

1. This is an earnings story, not a multiple expansion one.

2. This outlook builds on three themes we have emphasized since last year: running the economy/earnings cycle hot, public to private rebalancing, and a broadening of earnings and performance.

3. The fear of AI is leading many companies to “run it lean” in an economy that is also running hot. This has only boosted the operating leverage and margins further and one reason we raised our EPS forecasts last week.

In our baseline, we have 2026 EPS of $339 (23% growth), 2027 EPS of $380 (12% growth), and 2028 EPS of $429 (13% growth). The drivers of our resilient earnings forecast are: positive operating leverage and margin expansion aided by AI adoption, stabilizing pricing power in goods oriented end markets and a capex cycle that continues to show momentum…

May 17, 2026
MS Sunday Start | What's Next in Global Macro: Constructive and Cautious, Not Complacent Amid a Fluid Outlook

Our Midyear Strategy Outlook published last week highlights the fundamental momentum in the global economy as a driver of markets, with the energy shock as a key downside risk. The disruption has lasted almost three months, but drawdowns in inventories and redirection of trade have kept macro implications muted to date. If oil prices rise significantly from current levels or the disruption continues for another quarter, the macro narrative will shift. Our Outlook frames alternative scenarios along these lines. For now, we focus on positive structural drivers — AI-driven capex, wealth-driven consumption, and a return to full employment — that should support a recovery in growth next year…

…Rates face more cyclical uncertainty across our scenarios, but we remain constructive on duration. As ever, timing is crucial and may favor non-US markets for now. We see no need to rush and recommend playing the curve shape initially, acknowledging near-term risks. These uncertainties keep the dollar range-bound, weakening before tightening in 2027.

Risk markets are generally pricing in the more-benign scenarios, and that view is broadly consistent with our Midyear Outlook. But we do think the tail risks may be more meaningful than many investors realize. The energy volatility we have seen could easily catalyze the recessionary scenario. But the upside risks from an ever-rising global capex cycle, rising productivity from AI, and the acceleration in growth that would come with it keep us constructive, though not complacent.

May 18, 2026
MS Global Economic Briefing: The Weekly Worldview: A Fluid Outlook – Structural Strength vs. Cyclical Weakness

We discuss our constructive outlook for the global economy. Energy volatility generates a wide range of outcomes, while the AI boom remains a critical driver of demand, but its effects on productivity are a wild card.

The economic outlook remains constructive, though not as strong as we forecasted a few months ago. High energy prices will boost inflation and weigh on growth, but structural fundamentals were robust before the conflict and—so far—remain so. The energy shock is still brief, at less than three months, but the longer it persists, the bigger the effects will be. In the US and Asia, the higher costs have been absorbed so far; our constructive outlook endures. Europe is more exposed, as a net energy importer and without fiscal stabilizers in place, the pass through to inflation will happen faster and the drag on growth will be great, but so far, we do not see it as recessionary. So our baseline is constructive but cautious; we titled the mid-year outlook “Fluid” to reflect the wide range of possible outcomes in the coming months…

…The duration of the oil shock is as critical for growth, inflation, and monetary policy as the price of energy. If the conflict escalates and oil prices surge through $150 and stay above $125 for several quarters, the outlook turns recessionary. A milder adverse scenario has a persistent oil price premium that reflects widespread but non-crippling shortages, prompting central banks to lean more aggressively against inflation. Both scenarios are negative, but the differences are significant.

But we also see substantial upside risks. Especially in the US, aggregate demand has proved resilient and could easily surprise us to the upside for a prolonged period. Strong wealth effects boost US consumption and AI-driven capex appears unrelenting. Taken together, the US growth impulse could build on itself and because consumption and investment goods have a huge import component, the rest of the world would benefit. But stronger growth with already elevated inflation would mean the Fed would hike, not cut. The ubiquity of the AI narrative forces the question of what if productivity gains come far more quickly than expected? If so, investment might stay strong, but labor market disruptions and job losses would hit consumption spending. Higher unemployment and lower inflation despite firm growth is a recipe for the Warsh Fed to cut rates to stabilize employment…

Exhibit 2: AI-driven capex and resilient consumption, and an improvement in non-AI capex supports US growth, but persistent inflation or stronger activity would take away the Fed cuts we have in our baseline

MORE uncertainty w/regards to the Persian Excursion and yet … bonds are relatively calm (after an early selling storm) …

18 May 2026
UBS: MORE MARKET ANGST

Markets are unsettled by a fire at an Emirati nuclear power plant, caused by an unidentified drone. US President Trump posted on social media about Iran using capital letters, and Iranian media are clear that Iran does not see an imminent US deal. Oil prices are still well below levels required to match supply and demand (without using reserves). Separately, media reports progress on a UK trade deal with Gulf states—not relevant immediately but important when reconstruction and rearmament budgets start to be spent…

Dr Bond Vigilante asks IF time for brake OR BREAK and offers a(nother)econ calendar … ONE thing which caught MY attention is NOT RULING OUT JUNE HIKE and in concert with this, yields moving higher from here (4.75 / 5.00?) would be an excellent #DipOrTunity (my word, not theirs) in bonds (and stocks, too…)

May 17, 2026
Yardeni MARKET CALL: Time for A Break Or a Brake?

The S&P 500 sold off by 1.2% on Friday after hitting a record high of 7501.24 on Thursday. We are sticking with our 8250 year-end target for the S&P 500 (chart). However, the index might have peaked for a while. That’s because bond yields spiked on Friday, which just happened to be Kevin Warsh’s first day at the office as the new Fed chair. The bond market fears that he will tolerate inflation rather than hike the federal funds rate (FFR). He will likely have to cave and join the tightening camp sooner rather than later. The Bond Vigilantes will force him to pivot. So will his colleagues on the FOMC.

The Strait of Hormuz remains closed. In a post on Truth Social, President Donald Trump warned: “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!” A drone strike caused a fire at a nuclear power plant in the ​United Arab Emirates, officials there said on Sunday, while Saudi Arabia reported intercepting three drones.

Brent crude is up $2 to $111 per barrel this evening (chart). The longer it remains here or higher, the greater is the likelihood that the Fed will have to pivot from its easing bias in April to a tightening bias in June and an actual rate hike in July. We wouldn’t rule out a June rate hike.

Last Wednesday, when the 10-year US Treasury yield was 4.46%, we predicted it was “likely to move up to 4.60% in the coming days.” It got there on Friday (chart). This evening, it is at 4.63%. If it moves higher from here, then we would expect it to peak between 4.75% and 5.00% in the coming weeks. That would be a good buying opportunity for both bonds and stocks.

The S&P 500 forward P/E has risen 10% from its recent low of 19.1 to 21.1 on Friday, while the 10-year yield has climbed 63 bps from its low of 3.96% earlier this year (chart). If yields continue climbing, stocks will likely experience another P/E-led pullback. We would view it as another buying opportunity.

May 17, 2026
Yardeni: ECONOMIC WEEK AHEAD: May 18-22

On Friday, the S&P 500 fell 1.2% from its record high of 7501.24 on Thursday. A run of hot inflation data and a spike in bond yields did the damage on Friday. April headline CPI hit 3.8% y/y, the highest since May 2023, while core CPI was 2.8%. The big shocker was last Wednesday’s April PPI for final demand, which rose 6.0% y/y, the biggest increase since December 2022 (chart).

Federal funds futures have fully reversed the Fed’s easing path priced just three months ago, with the next move now expected to be a hike. The 2-year Treasury yield rose to 4.08% on Friday, confirming that the current federal funds rate (FFR) range of 3.50%-3.75% is too low. The 10-year Treasury yield jumped to 4.60%, and the 30-year topped 5.10%, the highest since May 2025.

As we signaled last week, we expect the FOMC to signal a tightening bias at the June meeting of the monetary policy-setting committee, followed by a 25bps FFR hike at the July meeting. We can’t rule out more rate hikes over the rest of this year.

…(1) FOMC minutes. Wednesday brings the minutes from the April FOMC meeting, when the Fed kept rates on hold for the third consecutive meeting. The headline was the dissent: As usual, Stephen Miran voted for a cut; but three officials objected to including an easing bias in the policy statement, arguing that the data no longer justify signaling that the next move would be a cut. The minutes will indicate how many other participants might have also leaned toward either a neutral or hawkish bias.

In the past few weeks, Fed funds futures have flipped from pricing in cuts to pricing in one hike over the next 12 months (chart). With inflation now running too hot, the easing-bias language is the most dovish element of current Fed communication. It is unlikely to survive June’s FOMC meeting. The bias is likely to flip straight from dovish to hawkish.

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK looks at bonds markets in G7 and concludes, HIGHER FOR LONGER, for now, so plan accordingly …

May 17, 2026
Apollo: Why G7 Government Bond Yields Are at Their Highest Levels Since 2004

The chart below shows that G7 government bond yields have surged to their highest levels in more than 20 years, driven by:

1) renewed inflationary pressure from elevated energy prices as the Middle East conflict disrupts global oil supply,

2) persistently large government deficits requiring ever-increasing bond issuance,

3) the end of central bank quantitative easing with the Fed balance sheet potentially shrinking, and

4) investors demanding higher term premiums and inflation premiums amid deglobalization and increased geopolitical fragmentation.

With no clear resolution in sight on any of these fronts, the era of artificially suppressed yields appears firmly behind us.

In short, rates will stay higher for longer, and investors should plan accordingly.

DISCIPLINE … replaces emotion. In theory. Here are a few words and a visual I find helpful …

May 17th, 2026
DISCIPLINE FUNDS: Three Things – Is This a Bubble?
Here are some things I think I am thinking about this weekend.

1) Is the Stock Market a New Bubble? …

…2) Are Bond Yields Going Even Higher?

Bonds are getting dinged again as inflation expectations tick a bit higher. That’s not totally surprising given the continued surge in oil prices. The market had been expecting rate cuts with a new Fed Chief, but now the expectations have flipped. Despite this, I think a little nuance is required to put this in perspective because a reversal in expectations doesn’t suddenly mean bonds are going to blow up.

There has been renewed chatter in recent weeks that we’re headed back to the 70s (again). People love this chart from Larry Summers showing the 2014 starting point compared to the 70s. As if there’s some sort of necessary temporal relationship between the two time periods because…because!

Are we going to get another big surge in inflation? We’re seeing a surge! It’s surged from 2.4% to 3.8% in just 5 months. That’s a pretty sizable jump. The problem is, it’s mostly cost push inflation driven by the war in Iran. Consumers will eat the price hike until they can’t. But here’s the thing – in order to get a 1970s style inflation you need a much larger boom in oil and commodities. And I mean MUCH larger. You see, in the 70s that second big jump in prices coincided with a 150% surge in oil prices after the first big surge. So, if we’re expecting inflation to go to 14% year over year (or anything remotely close to that) then you need a record breaking surge in oil prices and broader commodities on top of what we’ve already had. The equivalent sort of price action is a move to something well above $300 oil. But that brings in another problem – the US economy isn’t nearly as oil dependent as it was in the 1970s. So it would take a much broader and much larger commodity rally to cause this. And it would need to be supported by some sort of underlying stimulus from global governments. None of which is completely out of the realm of possibility, but I struggle to see what will cause that aside from maybe a Chinese invasion of Taiwan.

As for the data – our leading inflation index, which has been ahead of this entire move in inflation, is up to 3.4%. That’s not great and it’s well above the Fed’s target, but it’s nothing to panic over. So, I view this recent move in yields as more of an adjustment to expectations and not some sort of fundamental shift in inflation trends that portends a repeat of 2022 or the 1970s.

Speaking of bond yields – I did a small software update on our Escape Velocity Tool. This is one of my favorite bond market metrics as it measures the theoretically optimal point on the yield curve by comparing current yields and current durations. In short, when the yield equals the duration you have a level of “escape velocity” where an interest rate shock is offset by the bond’s interest over a one year period. We added a historical look at how this metric would have positioned you in the yield curve over time and also added a shock analyzer where you can change the size of the interest rate shock. Right now the optimal point on the curve is about 4.5 years, which is pretty consistent with an environment in which interest rate risk is still high, but you also don’t want to be too long or too short.

3) A Tough Fed Chair, Just in Time!

We got an official Kevin Warsh confirmation this week for new Fed Chair. It’s interesting because Warsh was notoriously hawkish in the past. And this week he was talking tough about the size of the Fed’s balance sheet. It’s funny timing because inflation is bumping up a bit and I don’t think you can justify cutting rates here. But Warsh was obviously nominated because Trump expects a more dovish Fed Chief. Gulp.

So, how is this one going to play out? Well, the good news is the Fed Chief doesn’t control the FOMC and I think the Chief would have a pretty hard time convincing all the members to vote for a cut in this sort of environment. But it’s going to be interesting to see how this one plays out in the coming months because I don’t think Warsh can fight the pressure from Trump for long. But at this point the inflation battle seems to be more in the hands of the President than anyone else. After all, if we want low future inflation during an AI boom then it seems pretty obvious that ending the Iran conflict and getting oil back to $75 is a slam dunk way to get there. And that is a decision by the Executive branch, not the FOMC.

Well, that’s all I have for you this week. As always, stay disciplined out there.

… THAT is all for now. Off to the day job…

CNBC: Kevin Warsh comes into the Fed facing a big ‘family fight’ over cutting interest rates

CNBC: 30-year Treasury yield tops 5.1%, highest in nearly a year

CNBC: The bond market is flashing a warning over Iran. A veteran of energy geopolitics explains the risk

We’re going to be inundated with headlines of US / China deals and with regards to SoH and EARL. What all of this means in as far as RATES is, well, anyone / everyones GUESS…

2yy WEEKLY (line): above 4.00 leads TO 4.375 OR back to 4.00 and below…

… momentum becoming overSOLD and so the idea is the Fed HIKES and yields explode OR we’re supposed to be covering shorts and buying front-end … where is Prof 2yr when you need him …

#Got2s? My apologies for the ‘chart crime’ above but idea is MY TLINES are personal and left up as my guide. Yers may look different and your opinion and view is just as valid.

I’m torn.

I’m sympathetic with both sides of the story. Longs and shorts are both my favorite trades right now. The bulls and the bears have some logic on their sides.

Inflation does not appear to be going anywhere, anytime soon.

Sticky.

At the same time, bonds forced to price this (and hikes?) in and higher rates attracting attention. And capital. From stocks. As they are more, well, ‘attractive’.

The move higher in rates is also creating demand overseas …

BMO (below) offers a look at HISTORY (never ‘different this time’, right) of when 30s close north of 5% — it’s proven #DipOrTunity and bonds return comfortably to a ‘4’ handle in days (maybe weeks) ahead.

On the other hand, DB — bearish and looking for 4.45 10s — has adjusted target HIGHER (up to 4.65% now) and they have been right and feel as though structural as well as cyclical forces continue supporting the move HIGHER.

If / when EARL stops going UP, all things will change.

It’s likely to be too late to buy unless, of course, it’s forced (risk managers always ruin the party).

Said another way, MARKETS been doing the work FOR the (new)Fed …

Last Updated: May 15, 2026 at 6:21 a.m. ET
MarketWatch: The bond market is already hiking rates as Kevin Warsh takes over as Fed’s new chair

…The 30-year Treasury yield this week topped the 5% threshold, the benchmark 10-year yield reclaimed the 4.5% for the first time since June 2025 on Friday, and the policy-sensitive 2-year yield climbed above 4%, also for the first time in 11 months.

All three rates are important to the Fed, banks and borrowers. But the 2-year yield’s move above the Fed’s 3.7% upper limit of its target funding range is particularly noteworthy, as the below chart shows.

The 2-year Treasury yield is sitting above the Fed’s upper level of its short-term lending target.Photo: Federal Reserve, FRED data

That’s because the 2-year Treasury yield usually doesn’t sit above the Fed’s short-term target range, a rate that influences overall borrowing conditions. What the new shift signals is that the Treasury yield curve is increasing rates, even before the first policy-setting meeting set for June 16-17 with Warsh serving as chair.

“This is the modern bond vigilante,” said Ahn. “They don’t burn down the Fed’s credibility with one yield spike. They starve its optionality by lifting the entire curve above the policy band.”

There has long been a perception that new Fed chairs are swiftly tested by turmoil in markets shortly after taking the reins, according to Deutsche Bank’s Jim Reid, who noted the actual data on the topic has been mixed…

… TESTS straight ahead, no doubt. Are we entering El Erians STAGE 3 (demand destruction and weaker econ)? Could very well be and so, the higher rates go, the tighter financial conditions become, the stronger the case for … CUTS?

May 16, 2026
Global Economy and Markets: The Context: A Look Back
Mohamed El-Erian

…Yet, this week also pointed to factors that risk undermining what has been an incredibly impressive stock market surge:

Demand Destruction: The longer and larger the global inflation hit, the greater the risk of demand destruction. This represents Stage 3 of my simple framework for the economic fallout of the Middle East War.

Sovereign Contamination: Stocks could face cross-asset contamination from continued bond market volatility in the more vulnerable G7 economies. On this front, I am keeping a close eye on Japan (a major holder of foreign securities that have already seen some drawdown) and especially the UK which illustrated five warning signs last week: the sheer size of the sell-off, its ultra-high beta attribute relative to other G7 markets, its eroded policy buffers, the rapid transmission to both the fiscal budget and Main Street, and a multidimensional fallout with financial, political, and social ripples.

NOTED and not lost on any of us, I’m quite sure.

DATA? Sure, look … data is FINE so rate CUTS not needed and apparently, higher rates are FINE ??

ZH: US Industrial Production Surged In April

Despite record low consumer sentiment (if you believe UMich), this morning saw the Empire Fed survey show New York state factory activity expanded in May at the fastest pace in four years, and firms grew more optimistic about the outlook.

That was followed by a much hotter than expected Industrial Production print (up 0.7% MoM vs +0.3% MoM exp and higher than the highest estimate) for April (and March’s decline revised stronger), lifting annual growth up to +1.35% YoY...

… I’ll quit while I’m behind, am still torn thinking DEMAND DESTRUCTION and tightening of financial conditions (higher rates) as high / rising stock prices working to EASE said financial conditions.

NOT drawing the pre DOT COM analog, just thinkin’ outloud and just back from filling up some of the fleet … $4.21 / gallon and just inside $70.00 … PAY CUT.

With the idea of PAY CUT in mind, to the BondBot Intern …

Bonds Finally Read the Fine Print

The Treasury market spent the week vomiting up duration like bad sushi. 2s ripped 15bps higher as traders quietly replaced “rate cuts” with “maybe hikes again,” 10s blew through 4.50%, and the 30-year crashed north of 5% like it just discovered inflation wasn’t “transitory,” only on sabbatical. Oil screamed higher on the Persian excursion and a China summit that produced all the diplomatic firepower of a hotel breakfast buffet. Stocks wobbled because higher yields are the financial equivalent of gravity returning. CME FedWatch now shows hike odds climbing sharply since the Iran conflict began, which is Wall Street’s way of saying gasoline at $105 tends to ruin everyone’s dovish personality. For everyday Americans: mortgages, autos, and credit cards just got more expensive again.

“Turns out the bond market’s favorite peace treaty is still called lower oil prices.”

… I’ll move on TO some of Global Walls narratives I’m still blessed to stumble upon one way or another. These are SOME of THE VIEWS you might be able to use … How about timing of UPDATED short 10s call?! Hey now!!

Bonds NEVER shriek, bonds are bold and beautiful … ok, this week they may have shrieked …

15 May 2026
Barclays Global Economics Weekly: Leaders meet and bonds shriek

The Trump-Xi meeting did not deliver any tangible outcomes, with no shared approach to reopening the Strait of Hormuz. As energy-driven price pressures pile up against a still-resilient US consumer, inflation becomes the focus. Long-end yields surged and even Fed hikes came into investors' view…

…US Outlook
Into the fire
Kevin Warsh was confirmed as Fed chair this week, taking the helm from Powell, who will remain as a governor. Warsh will inherit a hot seat, with cost pressures now becoming quite apparent and little indication that demand is cracking amid robust AI-related capex and resilient consumer spending …

Best in show addressing specifically what happens when bonds close north of 5% … short version is BUY BONDS as yields mean revert (think, NONE SHALL PASS) … and yet, while that is the takeaway, what’s noticeably absent? A long position … hmmm ….

May 15, 2026
BMO US Rates Weekly: Practical Patience

…The limited data calendar and approaching summer months should contribute to listless trading conditions in US rates. A bull flattening consolidation is likely to prove the path of least resistance as the long-end pulls back from the upper-end of the yield range and 2s remain anchored near 4.00%….

…Charts of the Week
…With 30-year yields back into the land of the 5-handle, our second chart takes a look at the historical performance of 30-year yields during selloffs that resulted in a daily close above 5.0%. To be clear, the chart compares the current episode to the average of the previous five instances since 2006, as well as the range offered by the mean ± 1 standard deviation. Over the last two decades, selloffs that brought 30-year yields into 5-handle territory have been generally short-lived as the elevated outright level of rates attracted dip-buyers. Recall that 2025 saw two bond selloffs that resulted in a >5.0% close, and in each scenario, 30-year yields stayed above 5.0% for only three trading days before returning to 4-handle territory. The October 2023 visit to 5-handle territory lasted less than two weeks. Before that, we have to go back to the selloffs during 2006 and 2007, which saw 30-year rates trade above 5.0% for a few months.

Using these five scenarios, by the 10th trading day after a >5.0% close, 30-year yields were, on average, 4.94%, and the range offered by the mean ± 1 standard deviation was 4.81% to 5.08%. By the 30th trading day after a 5-handle close, 30-year yields were, on average, 4.91% and the one sigma range was 4.65% to 5.17%. By the 50th trading day, the average was 4.74%, with a one sigma zone of 4.29% to 5.19%. Of course, the average drop in rates after a >5% close is even more dramatic if we exclude the 2006/2007 selloffs and only look at the past few years. In this case, the averages on the 10th, 30th, and 50th trading days were 4.84%, 4.76%, and 4.54%, respectively. Overall, history alone would suggest that the 5-handle yield peaks are likely to be established in short-order and the long-bond will make a sustainable return to 4-handle territory in the next few weeks, if not months.

Bearish. Approaching target defined while ago and rather than putting some hay in the barn (mistake, IMO), they’ve simply adjusted the target … does appear stop to be ‘trailed’ so no matter what, THEY WIN …

15 May 2026
DB: US Fixed Income Weekly

Firm CPI and PPI prints this week, alongside hawkish FOMC commentary, reinforced rate hike expectations with a full hike now priced by mid-2027. Given that the Committee has several tools available to dial up policy restraint before hiking outright (e.g., adjustments to statement language or SEP projections), Warsh’s bias for lower rates marginally reducing the odds of a hike, and that cuts through neutral have historically come much more rapidly than hikes, the most compelling position may be one that aims for convergence in the flies centered on M7 and Z7 (see here). For a more straightforward and liquid trade, we favor shorts on the SOFR Z6M7Z7 fly to position for a normalization of the “hump” on the curve. While 10-year yields reached our indicative target and 2026 forecast of 4.45% during this recent inflation-driven sell-off, we maintain our bearish bias on duration and move our target to 4.65% given structural supply-demand forces in bonds and elevated inflation risks that justify higher term premia. Separately, the Fed announced a stepdown in RMPs to just $10bn per month–slightly below our expectations of $15bn–likely driven by its confidence in the very benign funding environment in recent weeks…

15 May 2026
DB Investor Positioning and Flows - Tech Comes Full Circle

…The rally occurred during an off-the-charts earnings season that saw S&P 500 earnings growth (25%) surge to arguably its strongest in over 2 decades while growth for MCG & Tech is even stronger (43%). Positioning meanwhile is not nearly that high. But, while this might suggest that positioning has room to go much higher, we would caution that a part of the stronger growth has come from surging prices in the face of supply squeezes and the rate of these price increases is unlikely to be sustained, as we wrote in our Q1 earnings takes (A Sharp Acceleration, Raising Estimates, May 04 2026)…

Touching base / circling back w/a shop who’s been feverishly BULLISH BONDS out last week with mid-year outlook … interestingly enough I cannot find reference to previously recommended LONGS … maybe an oversight OR i’ve just missed it …

May 15, 2026
Morgan Stanley Insight: Global Macro Strategy Mid-Year Outlook: Slippery When Oiled

G10 rates should cheapen first versus forwards, then outperform as oil tails fade and front-end policy repricing leads, with curve views cleaner than duration. FX should see continued cyclical currency gains and a final leg lower for the DXY, but we maintain that the greenback's slack is limited.

Key takeaways

• G10 rates: We expect early cheapening versus forwards as markets price oil, demand, and supply tails, followed by outperformance as those risks fade and front-end policy repricing leads. The curve should carry more signal than duration: 2s10s steepening looks cleaner than relying on a large long-end rally…

…Interest Rate Strategy
In the US, we expect Treasuries to cheapen first, then outperform forwards as oil tails fade and the Fed path reprices lower. Our probability-weighted baseline puts 10y yields at 4.45% in 2Q26, before falling to 4.25% by year-end and 4.15% by end-2027. The range of outcomes remains wide: the oil-led recession bull case takes 10s toward 3.30%, while the US demand-upside bear case takes them toward 5.15%. We expect the curve to steepen over the horizon…

…US base/demand-upside/oil-led-recession/permanent-oil-premium forecasts: Our baseline is now a subjective probability-weighted UST path, not a clean read-through from the economists’ baseline. The starting mix is 40% baseline, 15% US aggregate demand, 10% AI productivity, 15% global oil-led recession, and 20% permanent oil premium. Oil tails keep yields cheap to forwards in 2Q26, with 2y/10y at 4.05%/4.45%, about 22bp/18bp above forwards.

As baseline probability rises to 100% by 4Q27, the Fed midpoint falls to 3.125%, 2y/10y end 2027 at 3.45%/4.15%, about 48bp/33bp below forwards, and 2s10s steepens to 70bp. The inflation mix limits the long-end rally: 5y/10y breakevens decline from 2.60%/2.40% at end-2026 to 2.35%/2.25% by mid-2027, while 10y real yields rise to 1.95%.

Scenario skew: The UST bear case is US aggregate demand upside: stronger wealth effects and animal spirits lift growth above baseline, the Fed hikes to 4.625%, the 10y reaches 5.15%, the 30y rises to 5.50%, and 2s10s inverts to -50bp by 2Q27. The UST bull case is now a global oil-led recession, not a mild domestic recession: crude above $150/bbl triggers demand destruction, the Fed cuts to 1.625%, the 10y troughs at 3.30%, and 2s10s steepens toward 165-170bp. The new permanent-oil-premium case keeps the Fed at 3.625%, the 10y near 4.45-4.65%, and the long end exposed to inflation risk, term premium, and supply.

US Treasuries as hedges: Market pricing sits above our subjective probability-weighted Fed path through 2027. Translated into scenario weights, it looks most like 84% permanent oil premium and 11% demand upside, with no recession weight. We expect pricing to move toward more recession probability over coming months, helping duration regain its risk-off hedge properties. As the market-implied policy trough moves lower into year-end, 10y yields should follow…

…The base case: probability-weighted baseline
…That outlook keeps oil tails alive early, then lets the curve migrate back toward baseline. The Fed midpoint holds at 3.625% in 2Q26, moves to 3.375% in 3Q26, and reaches 3.125% in 2Q27. We see the 2y and 10y at 4.05% and 4.45% in 2Q26, about 22bp and 18bp above forwards, then 3.75% and 4.25% by 4Q26, about 15bp and 9bp below forwards…

…By 2Q27, our targets are 3.60% for 2y, 3.85% for 5y, 4.20% for 10y, and 4.75% for 30y. By 4Q27, the 2y and 10y sit around 3.45% and 4.15%, 48bp and 33bp below forwards. The curve matters more than outright duration: 2s10s flattens to 40bp in 2Q26, then steepens to 60bp by 2Q27 and 70bp by end-2027…

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do …

POSITIONS written up / best described from the consummate professional …

Fri, May 15, 2026 at 12:06 PM EDT
Bloomberg: Bond Futures at Risk From Rapid Hedging Overhaul as Yields Climb

(Bloomberg) -- A global surge in yields is threatening to cause a disruption in the Treasury futures market — the principal tool for hedging US government bonds — as traders stand to overhaul their positions…

…Yield levels play a role in determining CTD status, however, and a prolonged shift in either direction can lead to switches. Because of differences between deliverable bonds, switches force futures traders to recalculate how many futures contracts they need to be long or short for a precise hedge — and to buy or sell accordingly.

For the June 2026 Treasury Bond contract, an original-issue 20-year bond maturing in November 2043 with a 4.75% fixed interest rate, has been the CTD most of the time since that contract gained front-month status in February.

A further increase in 30-year yields to around 5.35%, however, stands to cause the CTD to switch to a bond maturing in November 2045, with a 4.625% coupon rate, according to data complied by Bloomberg.

“A break well through 5% would create enough risk uncertainty to wreak havoc with a variety of trades/hedges as the number of contracts needed to balance another position could swing wildly,” CIBC Capital Markets strategists Michael Cloherty, Arjun Anath and Ian Pollick wrote in a report last week.

Switches also have the potential to upend Treasury basis trades, in which fast-moving traders try to capitalize on small divergences between cash and futures prices. Depending on the magnitude of the disruption, there could also be ancillary effects on interest-rate swaps, an alternative to futures for hedging Treasury positions, the CIBC strategists wrote.

Some investors using Treasury Bond or Ultra US Treasury Bond futures — allowing delivery of bonds maturing in at least 25 years — are likely “to shift to using swaps” as a hedge, they wrote.

A surge in demand to received fixed rates in the swap market, where long-term rates are already lower than corresponding Treasury yields, would widen those gaps, with implications for traders with positions in swap spreads, the strategists said.

“Higher yield environments can bring the possibility of a CTD switch into play,” said Agha Mirza, Global Head of Rates & OTC Products at CME Group. This is an “inherent consequence” of the market’s design and tends to be incorporated smoothly into pricing, he said.

CHARTS … bonds are once again, topical and so …

May 15, 2026
The Chart Report: Bond Yields Are Rising Across the Globe The Chart Report

Chart of the Day

🏆 Today’s Chart of the Day was shared by Robin Brooks.

The inflation trade has come roaring back this week, as a wave of hotter data may have forced investors to rethink the path of rates.

Global bond yields are moving higher in sync, with both current 10-year rates and long-term forward yields rising across the US, Germany, Japan, the UK, Italy, and France.

The sharp rise in 10y10y forward rates suggests investors increasingly believe structurally higher inflation, bigger deficits, and heavier debt issuance will keep rates elevated well beyond the current cycle.

The Takeaway: “Higher for longer” has officially gone global…

The yield curve continues to steepen.

Read the full analysis from Jason Perz…

Markets are now pricing in a 64% chance of a rate hike by year-end.

Examine the complete post from Jim Bianco.

POSITIONS … specs REMAIN SHORT THE LONG END so, #WINNING …

Hedgopia CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned

…30-year bond: Currently net short 172.9k, down 88.

Brent’s got some funTERtainment worth a view …

May 15, 2026
SPECTRA: Running out of rocket fuel
The rocket ship to Venus is running low on fuel.

…Interest Rates

Bonds are becoming a concern again as the U.K. political story heats up and global inflation spikes as Iran flexes its control of the Strait of Hormuz. Bond market volatility has been low but could pick up now because central banks don’t have the bond market’s back, and inflationary psychology from COVID threatens nearly-immediate second-round effects.

The big story is that the market is now pricing about 20bps of hikes for the Fed. This is in stark contrast to dreams of multiple cuts at the start of this year. Check out these four colored spaghetti noodles:

As I mentioned, I believe the market is not crazy to price Fed hikes here. Inflation could be a major political issue into midterms and the magical fantasy that a president can tell the Fed to cut rates to 1% and that makes any sense in the real world is closer to being dispelled. Warsh is the most orthodox, elite, $5000-suit, Morgan Stanley pedigree candidate for Fed Chair. Hassett, he is not. And there is zero shot the committee will vote for rate cuts in this sort of economic regime, regardless of what he says.

I can’t wait to see what Waller thinks about all this. Unfortunately, he’s not scheduled to speak as of right now.

The long end of the bond market is screaming in pain again.

Yields on the move … a couple MORE visuals as the Fed BEHIND THE CURVE …

WolfST: US Government Sold $691 Billion of Treasury Securities this Week, 10-Year Yield Spikes to 4.6%, 30-Year Yield to 5.12% as 2nd Wave of Inflation Takes Off - The Fed is “behind the curve,” and the bond market is getting very nervous. Treasury yield curve flips from a sag to a hump in the middle as 2-5 year yields spiked.

…The 40-year bond bull market died in mid-2020, when the 10-year yield bottomed out at 0.5% amid the Fed’s massive interest-rate repression. Since then, as inflation forced the Fed’s hands, it has been a rough ride back to normalcy.

A 10-year yield of 4.6% in a historical context is still relatively low. At this yield, with this potential path of inflation, and with this Fed that wants to sit on its hands to let it happen, 10-year paper looks very unappetizing to this observer, and 30-year paper looks even worse.

The 3-year Treasury note sold at auction on Monday at a yield of 3.965%. Then the yield spiked, amid the CPI and PPI inflation reports that followed the auction, including by 11 basis points on Friday, and ended at 4.15%.

In the four trading days since the auction, the 3-year yield has shot up by about 20 basis points from the auction yield. This is not fun for the buyers at the auction, and is a sign that the Treasury market is adding to the expectations of multiple rate hikes by the Fed, if not later this year, then next year.

The 3-year yield shows the U-turn in expectations in the market, having spiked by 76 basis points since February 27. The 3-year yield had anticipated the top of the rate hikes and then the rate cuts, and now by having blown through the EFFR is anticipating rate hikes.

Watching Prof 2yr … er, um Prof 3yr?

… AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.

First is a LINK thru to BMOs calendar …

… then there’s Wells FARGOs version …

Next week’s release of the April FOMC minutes will shed light on how members of the committee saw the Fed’s next move as balanced between a hike and a cut. U.S. housing data, meanwhile, point to a moderating construction backdrop, as March’s rebound in starts likely overstated momentum amid a 2.6% year‑to‑date decline in permits and continued affordability pressures. In Canada, inflation remains elevated but mixed, with headline near 3.4% and softer core measures around 2.1–2.2%, keeping the Bank of Canada cautiously tilted toward further tightening. In the UK, easing labor market conditions—wage growth near 3.8% and declining vacancies—contrast with still‑firm inflation around 3.0%+, leaving policy finely balanced. In China, growth remains uneven but steady, with industrial production near 5.9% and retail sales around 1.9%, as strong manufacturing offsets softer domestic demand and points to a gradual cooling ahead.

… and lets NOT forget EconOday links (among the best available and most useful IMO), GLOBALLY HERE and as far as US domestically (only) HERE …

Finally, believing EVERYTHING I read on the intertubes, AN UPDATE …

… seems ‘bout right …

… THAT is all for now. Enjoy whatever is left of YOUR weekend …

Equity futures and bonds LOWER (SoH comments, Fox) and EARL BID …

RTRS: Global bonds tumble as flaring inflation spooks investors

RTRS: Yield surge spoils the equity party

… AND a few thoughts …

Wait, what? There was a party and I didn’t get invited … again? Shocking!

Oh well … Back TO trading EARL. Inboxed at 143a …

…As we go to press this morning, markets have lost momentum after President Trump said the US doesn’t need the Strait of Hormuz open “at all”. So that’s added to fears that the Strait will remain blocked for some time, leading to a more protracted energy shock for the global economy. Indeed, Brent crude oil prices are up another +1.21% overnight to $107.00/bbl. And in turn, those inflation concerns have pushed the 10yr Treasury yield up +3.5bps this morning to 4.52%, its highest level since May last year. It’s a similar story for equities too, with S&P 500 futures down -0.25% this morning, slipping back from their record high yesterday…
-DB Early Morning Reid

More questions than answers (still / again) but will / can the ‘rate shock’ impact stocks, consumers and the macro backdrop enough to force KWARSH to defy hike odds and CUT?

Watching Prof 2yr along with all benchmarks, chugging along HIGHER nearing / surpassing recent highs. If / when this starts to take a bite out of ‘things’ (stocks, economic activity) remains to be seen — it IS, however, a boon to savers and those foreigners (Japan, below) who are attracted to 5% long bonds.

Not ALL bad. With this in mind, and without A Terminal, here’s all the history of 10s I’ve got …

10yy WEEKLY (LINE): 4.57% TLINE …

… as momentum leaning towards being quite overSOLD (#DipOrTunity?)

#Got10s? Watching vs 4.57 and from there, will ALSO be interested to see how market feels about them vs 4.65 (DBs updated target, below).

AND here we are … ALL of Global Wall on (EARL) notice (again) and on the backfoot (again) … Happy Friday?

Data? Who cares? ReSale Tales SAYS … GOOD (?) NEWS …

ZH: Despite Record Low Sentiment, US Retail Sales See Strongest Annual Gain In 8 Months

…Most importantly, the ‘Control Group’ which plugs into the GDP calculation rose 0.5% MoM (better than expected) and March was revised higher...

… Claims?? Also good, but local?

ZH: Florida & Texas Lead Jobless Claims Rebound From Near Record Lows

… forget it. Don’t care, didn’t ask.

Markets focused solely on SoH and EARL and I’ll turn quickly TO my BondBot Intern for a final few words …

Bonds Finally Found Something Scarier Than a Recession: $100 Oil

Treasuries got taken behind the woodshed after Trump casually told Fox the U.S. doesn’t care if the Strait of Hormuz stays shut “at all” — which markets interpreted as: “enjoy your inflation.” Oil ripped higher, WTI back near $100+, and yields blasted through every psychological tripwire traders watch: 2s above 4.00%, 10s north of 4.50%, long bond above 5.00%. Stocks immediately remembered math exists, with futures sliding as higher discount rates smacked lofty valuations. CME FedWatch now looks less like “when cuts?” and more like “cuts? that was cute.”

For everyday Americans, this means pricier gas, stickier mortgages, uglier credit-card bills, and a Fed stuck playing inflation whack-a-mole while Wall Street relearns that 5% money actually has gravity.

The bond market spent fifteen years on sedatives — one Hormuz headline later, it’s awake, angry, and demanding a higher yield for the inconvenience.

… HOPE to have something more over weekend as things continue getting back to our new ‘normal’ …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 700a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 15 May 2026

• NEWSQUAWK US Market Open: Stocks hit as Yields/Energy firm on renewed fears of US-Iran conflict resumption … USTs are currently down by 16+ ticks, and trading at the bottom end of a 109-16 to 109-29+ range. Attention over the past day has been on the Trump-Xi meeting, where initial commentary suggested positive developments; President Trump stated that many problems with China were “settled”. Focus now shifts from China, and back to Iran, where no progress has been made. Some reports have touted that Trump may look to immediately strike Iran after his China visit, to force Iran into a deal. If enacted, there is a risk that Iran chooses to restart strikes on US allies in the Middle East, leading to another spike in energy prices, hence filtering through into US yields.

• Yield Hunting Daily Note | May 14, 2026 | DMA Closer Look, CXH Tender, PDO Buy

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use … Many recaps / victory laps relating TO ReSale Tales …

A large British operation on ReSale Tales — holding in …

14 May 2026
Barclays US Economics: April retail sales: Consumers still resilient

Retail sales registered a decent April increase amid strength in the control group, gasoline stations and eating and drinking places. Higher gasoline and goods prices exaggerate these gains, as expected. We think that today's rise puts consumers on course for a 2.2% q/q saar spending gain in Q2 26.

Best in show with ReSale Tales (and daily)RECAP …

May 14, 2026
BMO: Retail Sales +0.5%, Energy Imports Jump, IJC 211k

April’s Retail Sales report showed a moderation of the gains in spending at +0.5% MoM vs. +1.6% March, matching the BBG consensus and marking a three-month low. The control groups series was +0.5% MoM as well, compared to the +0.4% forecast. For context, the 3-month average annualized pace of control group sales rose to +7.9% in April from +5.7% in March. This is the highest the measure has been since June 2022. On the energy side, gasoline station sales increased +2.8% MoM in April compared to +13.7% in March, as the initial shock of high oil prices continue to work through the system. Recall, these numbers are not inflation adjust and given that CPI in April gained +0.6%, real purchasing power for consumers is under clear pressure.

On the inflation side, the Import Price Index rose +1.9% MoM in April compared to the +1.0% consensus, and March was revised up to +0.9% from +0.8%. For context, April saw the largest monthly gain in import prices since March 2022. This brought the YoY pace up to 4.2% (highest since Oct. ‘22) from 2.3%. Ex-petroleum, import prices increased +0.7% MoM vs. +0.5% anticipated, and March was revised down to 0.0% from +0.1%. As it pertains to the implications for core-PCE, import air passenger fares were a bit soft, although estimates are likely to stay in the ‘high’ +0.2% to ‘low’ +0.3% range.

On the employment side, Initial Jobless Claims printed higher-than-expected in the week of May 9, coming in at 211k vs. 205k consensus and 200k prior was revised to 199k. This brings the 4-week moving average to 203.75k from 203.00k last. Continuing Claims rose to 1782k in the week of May 2 from 1758k prior, slightly above the 1780k consensus.

Overall, the mix of data has brought Treasury yields off the lows but the market remains firmer on the data…

May 14, 2026
BMO Close: Marooned in Mid-May

…our approach to the second half of May will be constructive on duration from current levels. Adding 10- year exposure (or even 30s at 5.00%) is consistent with the typical post-Refunding bullish consolidation. We’re not calling for a swift move back to 4.25%, instead we’ll target two opening gaps as key resistance. The first is a gap at 4.354% to 4.377%, and then if conviction holds, we will move the target to 4.300% to 4.304% (small gap from April 27). In the event that 4.50% is revisited on a further spike in oil prices, this would function as an effective stop.

The front end of the Treasury market has consistently found support whenever 2s reach 4.00% and we expect that this will remain the case. US equities have reached yet another record high, providing a backdrop of easier financial conditions than would otherwise have been the case. If nothing else, elevated equity valuations have provided the Fed capacity to hold rates steady and put Warsh in a challenging position should he intend to advocate for policy rate cuts this summer. At the end of the day, the ability of the Committee to justify lowering policy rates comes down to the data; the recency bias in light of sticky pockets of inflation suggests that the bar will remain high for a cut. In such an environment, the shape of the Treasury yield curve has become a directional trade and we’re looking for bull flattening in the near-term with initial support for 2s/10s at 44 bp and 40 bp beyond there.

NEXT UP a note from a bond bear (or one who’s at least runnin’ SHORT) and sticking with position even as it’s romanced TARGET … IMPORTANT, IMO … as most all on Global Wall jacking S&P year-end targets, this shop raising the 10yy target TO … 4.65% …

14 May 2026
DB: Raising the bar

In our 2026 outlook, we expected a mild sell off in UST and EUR bond markets, with the 10y US Treasury reaching 4.45% and the 10y Bund reaching 3.10%. Our forecast reflected structural and cyclical factors supporting higher yields, tempered by the risks and uncertainties associated with AI. Six months on, the market is currently trading close to our forecast, and our short UST 10y position is through its indicative target. Given the upside risks to our forecast, we maintain the short UST10y position and raise the indicative target and stop. However, given the uncertainty around the Iran war, we prefer to wait before formally updating our yield forecast…

…More importantly, our economists argue that the impact of AI has been more “textbook” than “tail risk”. Specifically, not only has AI related capex increased significantly, but there is, so far, limited evidence that AI is already having a negative impact on the labour market. On the other hand, there is some evidence that it is resulting in higher inflation, driven by higher input costs related to AI…

…How far could this upside be? Broadly speaking, we had assumed neutral rates at the bottom of the 3.5–4% range that could have been justified at the time. Assuming instead the midpoint of that range would add ~25bp to our forecast. Second, higher inflation risks would justify further upside to the term premium relative to our initial assumptions. We recently noted that the term premium could be 25–100bp higher than current levels…

…However, the structural factors supporting upside risks to our yield forecast lead us to maintain our existing short UST 10y position and raise the indicative target and stop to 4.65% and 4.30%, respectively…

15 May 2026
DB Japanese demand returns with 5% Treasury bond yield

The latest weekly MOF data out of Japan showed some interesting developments. In the final week of April and the first week of May, Japanese investors were significant buyers of foreign bonds while selling foreign equities. This sharply contrasts their activities between February and late April, when they were selling bonds and buying equities. The magnitude of the weekly flows since February has been large also relative to recent history.

The data primarily captures private sector activity. The bulk of the flows likely come from banks, although lifers, pensions (including GPIF), and trust accounts are represented as well. In a separate MOF data release, net selling of foreign bonds in February and March was largely tied to banks and some to lifers.

Japanese banks generally do not currency hedge. One interpretation of their reversal in foreign bond flows is that they sold into the rally in February and re-entered at higher yields over the past two weeks. Notably, 30yr Treasury yields reached 5% in late April and have hovered around that level since. At the same time, US equities look potentially vulnerable given the narrow breadth of the rally and the ongoing Middle East conflict, which created an opportunity to take profit after their recent run-up.

Portfolio rebalancing may have also played a role. The Japanese fiscal year ends in March, and selling is common around this period to reduce exposures. Japanese investors typically re-lever up in late April and more substantially in May with new risk budgets.

Consistent with this, we previously noted that 10yr Treasury yields had tended to rise during Tokyo trading hours earlier in the year, in line with net selling from Asian investors. Since late April, that pattern has reversed, with yields more likely to decline during Tokyo hours, suggesting improved net buying from Asia.

14 May 2026
DB US Economic Perspectives - Market myths: Falling LFPR has kept the unemployment rate from rising

• Since peaking at 4.5% last November, the U-3 unemployment rate (UR) has declined by ~20bps, averaging a little over 4.3% since January. Over the same period, the labor force participation rate (LFPR) has declined by ~50bps, averaging just under 62.0% since the beginning of the year. The drop in the UR alongside a larger decline in LFPR has fueled the market narrative that LFPR is the sole reason for the steady readings on the UR.

• Though the drop in LFPR may have been a minor factor, we disagree with the narrative that the UR would be meaningfully higher absent the recent decline in LFPR.

• As the BLS explained in its March technical note, this year’s household survey population controls put downward pressure on LFPR but did not impact the UR.

• While there are times when movements in LFPR can drive the UR higher / lower – it’s not uniformly the case to assume that the UR would be higher if participation was higher and vice versa. Case in point, the age cohort with the largest UR increase over the last three months also witnessed the largest decline in LFPR.

Real. Inflation-adj ReSale TALES …

May 14, 2026
First Trust: Data Watch - Retail Sales Rose 0.5% in April

…Implications…Nominal retail sales have risen 4.9% in the past year, but it’s important to remember the impact inflation has on these figures. “Real” inflation-adjusted sales are up just 1.1% in the past twelve months and still down from their peak in April 2022. No growth in four years. So despite the solid report in April, the broader picture remains soft. Keep in mind that higher than normal tax refunds may be temporarily boosting the spending power of consumers, too. In the meantime, expect continued volatility in this report as the war with Iran evolves…

INFLATION boosted ReSale Tales? Wait, WHAT? That good or no bueno …

May 14, 2026 12:59 PM GMT
MS: April Retail Sales: Prices boost retail sales

Key takeaways

• Headline retail sales rose 0.5% m/m with control group sales up 0.5% as well. Feb and March sales were revised up, a combined +0.4pp on control.

• Control group prices were strong in April, weighing on spending in real terms. We initiate our 2Q real consumption tracking at 1.8% q/q saar.

• Auto sales were a drag on headline while gas was a boost again. Restaurant sales were stronger than expected, +0.6% m/mm.

• Within control group, online sales, groceries, and sporting goods were strong. Clothing sales were weak.

• We continue to expect the oil shock will weigh more on goods spending in coming months, keeping it soft this year, while services spending remains resilient.

Coy game? I guess …

14 May 2026
ING Rates Spark: Flip the gaze from China back to Iran

US Treasuries are playing a coy game of waiting and watching for another attempt at a break above 4.5%. The 10Y euro swap rate is stuck between 3.0% and 3.1% for now. Ahead, the path will depend on the growth impact and potential second-round inflation effects from elevated oil prices. The China watch comes to an end on Friday. Back to Iran watching then

Treasuries on a holding pattern, but still tilted with an upside bias to yields

President Trump’s China visit is ongoing and offering a welcome break from Iran war angst. But that is what we are going right back to. The implications of the Iran war for US inflation have been clear in the past few days of releases for April, and while it’s not the best barometer of the war effect, export price inflation of 8.8% year-on-year is a scary enough number to at least ponder the implications of. We’re in May now, and every day adds to the pressure, and will continue to ratchet for as long as the stand-off persists.

The US 10yr hit 4.5% on Wednesday. Blipped up there in fact. And immediately got bought. We know 4.5% is a buy level. We’ve talked to investors globally, some of whom don’t pay huge attention to Treasuries, but hold them. And for most, 4.5% is a bliss level to get in at. Just as 5% is for the 30yr. So there is a bit of that in play. Ultimately, the 10yr yield managed to get down to below 4.45% early Thursday, but then edged higher through the US afternoon. The 4.45% area with an eye on an attack of 4.5% remains a defensible view ahead.

Even though 4.5% on the 10yr is typically a buy signal, the opposite dynamic can also apply. Should the 10yr yield manage to break above 4.5%, it could implicate a spiral to uncomfortable levels. This is a risk that remains front and centre, as we remain in a holding pattern on the Iran war and the shuttering of the Strait of Hormuz. It seems that the US strategy is to wait, and allow the pain to build within Iran. The thing is, that too inflicts pain domestically for the US. Not as much pain, more of an inflation irritant, but still a negative tilt for markets and the economy.

That negative tilt is being muted by the extraordinarily upbeat tone in the tech space and the ongoing AI revolution. There is a productivity dividend coming from this, which has an inflation containment element to it. And there is an elevated nominal GDP element to boot, which helps tame the debt/GDP spiral narrative. But still, the front and centre issue is delivered inflation, which remains troubling from a Treasury market perspective. We maintain a viewpoint centred in an upside test for yields in the weeks ahead, until or unless we know more…

US / China meetings … a big nuthin’ burger?

15 May 2026
UBS: Saying stability without substance

The China-US summit concluded. Much increasingly scarce jet fuel has been burned to produce nothing of real substance. China’s President Xi declared an agreement to keep trade ties stable. The two sides were unlikely to agree to anything different (no one would announce unstable trade ties). Stability is not a word that is normally associated with US trade policy over the past 15 months, lessening the statement’s value.

US April industrial and manufacturing production data is due. These are volatile numbers; after plunging in March, the figures are seen recovering (with an upside bias to the consensus). However, the Biden-era factory building boom has slowed dramatically during the past year, and almost 80,000 manufacturing jobs have been lost since January 2025…

Finally, Dr. Bond Vigilante weighs in again …

May 15, 2026
Yardeni: Another Day, Another Step Closer to a Tightening Bias

Two important psychological levels are being tested in the US Treasury market right now. The 2-year yield is trading just above 4.00% this evening, May 14 (chart). That’s 25bps above the current federal funds rate (FFR) range of 3.50%-3.75%. That implies investors believe the Fed may need to raise the FFR by at least 25 bps in the foreseeable future.

The 30-year yield breached 5.00% on May 13, triggered by a $25 billion auction that drew such weak demand that it marked the first time since 2007 that the Treasury has auctioned a 30-year bond with a 5% handle. The 30-year has held above 5.00% since, trading at 5.06% this evening (chart). The 10-year yield is trading just above 4.50%, at 4.51% this evening.

The Bond Vigilantes are sending a clear message to the Fed. Drop the easing bias that was in the April FOMC statement. Don’t replace it with a neutral stance, but go straight for a tightening bias. Otherwise, the yield curve might start pricing in another Fed policy mistake, i.e., failing to turn hawkish quickly enough to fight inflationary pressures stemming from the Gulf War…

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

We’ve been here before … it was 2022 …

May 14,2026
AAA: Little Relief for Drivers as National Average Dips then Rises Again

WASHINGTON, DC (May 14, 2026) – After five straight days of declines earlier this week, the national average is once again on its way back up. Today’s national average is a couple cents lower than last week, but with crude oil prices hovering in the $100/barrel range, pump prices remain elevated. The graph below shows the national average at the same range as it was in 2022, the year gas prices hit record highs. Travelers are preparing to hit the road in record numbers next week, and drivers will be facing the highest Memorial Day gas prices in four years.

NEXT up, the good Doctor SLOK says … things getting LESS BAD for HH …

May 15, 2026
Apollo: Financial Stresses Easing for Households

The share of consumers who expect to miss a minimum debt payment in the next three months just hit its lowest level in several years, a quiet but meaningful sign that financial stress is easing. The bottom line is that households are feeling better about their finances.

AND any way you slice it …

May 13, 2026
CARSON: Inflation’s Elevated No Matter How You Slice It in 10 Charts

The inflation data doesn’t look good, no matter how you slice it. The headline Consumer Price Index (CPI) rose 0.64% in July (equivalent to 8% annualized rate), with the three-month annualized pace running at 7.3%. CPI is now up 3.8% over the past year, the highest reading since May 2023…

…Bonds Don’t Like the Inflation Backdrop, But Stocks Do (For Now)

The most direct impact of the inflation backdrop is on the bond market. Short and long-term yields are at the highest levels we’ve seen this year and reflect the real cost of the Middle East crisis and underlying inflationary heat. US Treasury 2-year and 10-year yields have risen to their highest levels this year, even with the equity market reaching all-time highs:

• The 2-year Treasury yield has risen from 3.37% on the eve of the war to 3.99%.

• The 10-year Treasury yield has risen from 3.94% to 4.46%.

Keep in mind that bond prices fall when yields rise.

As we discussed in our 2026 Outlook, we expected to be in an inflationary growth environment this year, and that’s where we are. But it’s not great for bond yields and general borrowing costs. As I wrote in my prior blog, the labor market is also holding up, and normally, we’d be talking about rate hikes. However, the Federal Reserve under incoming Chair Kevin Warsh is expected to hold rates steady for the rest of the year, rather than raise them. That’s a potential tailwind for stocks, on top of the fact that a lot of the profit growth you’re seeing is the other side of the inflation coin. After all, one company’s margin expansion (and profit growth) is another person’s inflation.

Officials are askin’ …

May 14, 2026
FRBNY Liberty Street Economics: Do Job Postings Show Early Labor-Market Effects of AI?

…AI Exposure Remains Limited in Both Employment and Vacancies

…Conclusion

Overall hiring has slowed since 2022, and unemployment has increased among young workers and recent college graduates. The evidence from job postings suggests that while AI may be contributing to recent labor market developments, it is not the main driver of the slowdown in hiring. In line with this interpretation, the New York Fed’s business surveys indicate that, so far, firms intend to incorporate AI mainly via retraining, with limited effects on hiring. While job postings show a relative decline in vacancies in occupations with greater exposure to AI, that divergence began before the release of ChatGPT in late 2022. Moreover, we do not observe a divergence in labor demand between junior and senior positions within highly exposed occupations. These patterns make it difficult to attribute the recent slowdown in entry-level hiring to AI alone.

… THAT is all for now. Off to the day job…

Equity futures CLIMB (Wall O Worry), bonds BID (off lows) as EARL DROPS …

RTRS Exclusive: US clears H200 chip sales to 10 China firms as Nvidia CEO looks for breakthrough

RTRS: CISCO jumps 17% on job cuts, AI-led restructuring plan

… AND a few thoughts …

Feeling wholly uninspired this morning and found it interesting that firm ‘flation print hit the bond market early, 10s romanced 4.50% but held. Stocks traded almost entirely on their own and on heels of NVDAs leader in China with Trump (early) then reflexing higher TO CSCO news (rev and earnings BEAT, headcount CUT).

Fine with me…and leads me back TO THAT (idea of rate CUTS) which didn’t age well … NOT givin’ up on the idea — AI still may very well usher in more DIS inflation, but hasn’t yet showed up in earnest, in labor markets … although, CISCO news and negative real earnings ARE potential reminders. Be that as it may, current inflation remains topical …

ZH: Yields Spike As Producer Prices Explode Higher In April

WolfST: Producer Price Inflation Explodes as the Services PPI Blows Out on Top of the Energy Price Spike - This is a massive amount of inflation that companies are passing on to each other through much of the economy.

… hot ‘flation led to …

ZH: Ugly, Tailing 30Y Auction Makes History With First 5%+ Yield Since The Great Quant Crash Of Aug 2007

… aside from tailing and ugly, it was fine … Bigger problem may come in the form of a question of whether (when OR IF — YOU decide) rates remain high enough for stonks to care …

May 13, 2026 at 11:29 AM EDT
Yahoo Morning Brief: The 10-year is approaching the danger zone for stocks

…The 4.5% level on the 10-year yield and 5% level on the 30-year yield are seen as critical levels that can begin to exert downward pressure on equities. On Tuesday, veteran market strategist Ed Yardeni told Bloomberg TV he’s not “freaked out” by the move higher.

“I kind of view bond yields of four and a quarter percent to four and three-quarter percent as normal — I’m not getting freaked out by it,” Yardeni told Bloomberg. “The US bond is still viewed as the safe haven, and there’s plenty of reasons to worry about things these days.” …

May 14, 2026 at 6:00 AM EDT
Yahoo: S&P 500’s earnings boom faces a BOND MARKET WARNING

Stocks are hitting records as earnings surge. Meanwhile, bonds are competing harder for investor cash.

…Profits are strong enough to justify the record highs that stocks keep hitting.

But the bond market is making that climb harder.

The chart below shows the S&P 500’s realized earnings yield minus the 10-year Treasury yield (^TNX), a version of a bond-stock valuation gauge recently highlighted by the Kobeissi Letter.

Earnings yield is the inverse of the famous price-to-earnings (P/E) ratio — basically, it’s how much earnings investors are getting for every dollar they pay for the index. The government’s borrowing rate on 10-year debt is subtracted to show how much extra earnings yield investors are getting — or not getting — for owning stocks instead of Treasurys.

Right now, the S&P 500’s realized earnings yield is roughly 3.4%, below the 10-year Treasury yield near 4.5%. That leaves the gap at roughly negative 110 basis points — or 1.1 percentage points — the widest negative reading since 2003.

That gap is often used as a rough proxy for what’s called the equity risk premium, or the extra compensation investors expect for owning stocks instead of “safer” government debt.

The chart doesn’t imply that stocks need to fall. It just means the old post-financial-crisis math has changed. When long-term bond yields were historically low, expensive stocks were easier to justify. Now Treasurys are offering a real alternative.

The important caveat is forward earnings.

Using the forward P/E — which reflects what analysts predict for earnings over the next year — instead of realized P/E, changes the picture a little.

With the forward P/E, the S&P 500’s earnings yield is around 4.5%, slightly over the 10-year yield. In other words, the realized chart says bonds are winning. The forward version says stocks still have a tiny edge — if earnings keep showing up.

But if the 10-year yield definitively breaks above 4.6% and surges higher — as it’s been threatening to do for over a year — the investment math will shift strongly in favor of bonds over stocks.

That’s why the current earnings boom is so important. The market is not ignoring the bond warning. It’s betting that future profits can outrun it.

… Well said and more than enough on a day where I’m wholly uninspired … Given all the above as inputs, over TO my BondBot Intern for a few final thoughts…

HIGHWAY TO THE DANGER ZONE: Bonds Buzz the Tower While Stocks Pretend Maverick Still Has Clearance

Treasuries stole the show after another volcanic PPI print shoved the 10yr toward the “Danger Zone” at 4.50%, while 30yrs flirted above 5% and 2yrs pushed near 4% as traders quietly deleted their “Fed cuts by summer” spreadsheets. Meanwhile, stocks did what stocks do in 2026: ignored bond math entirely. The S&P and Nasdaq hit fresh highs behind AI euphoria, with Tesla, Nvidia and assorted CEOs following Trump through China like a billionaire boy band tour. Oil stayed oddly civilized near $102 despite the Persian excursion dragging on, because apparently geopolitics is now “old news” too. CME FedWatch odds for cuts have collapsed since the Iran conflict began as hotter inflation and sticky energy prices revive “higher for longer.” Bond traders see valuation gravity; equity traders see forward P/Es and vibes. For everyday Americans, this means mortgages, credit cards and auto loans remain painfully expensive while Wall Street debates whether 4.50% is turbulence…or the engine fire warning light.

The stock market keeps dancing like rates don’t matter — right up until the bond market rips the aux cord out of the dashboard.

… NOT too shabby …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 700a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 14 May 2026

• NEWSQUAWK

• Reuters Morning Bid: ‘G2’ choreography

…Fed may have to hike to defend its credibility
Sitting out the oil shock may not be enough. The Federal Reserve may now have to prove it will act to meet its inflation target, much as its counterparts in Europe seem determined to do. Given what Wall Street forecasters currently think, that could pack quite a punch if it happens.

Year-end crude oil futures are near their highest level of the Iran war so far, and with little sign of a durable peace deal. April U.S. inflation data this week showed the ‌mounting damage to already above-target prices.

Graphics are produced by Reuters.

• Yield Hunting Daily Note | May 13, 2026 | PPI Hot, Convertibles (BCV), Tech CEFs

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use … More than a majority of notes are PPI related …

OLD but good note / visual from THE bank of ‘our land’ suggesting 2s SHOULD be much higher, based on RECENT labor mkt surprises …

11 May 2026 Corrected
BAML: Liquid Insight
US rates: hike risk underpriced

Key takeaways

• We see Fed hike risks underpriced due to solid US labor market & elevated inflation

• Mkt unwilling to price hike b/c Warsh, Fed 3% anchor, slowdown worry; we say = FOMC tide shifting, risk assets not restricted

• We now like being paid front end (2Y), 2s5s flatteners, short 10Y UST vs Bunds

Everyone has a right to their very own opinion AND can use facts and spin that view however they wish … these folks are quite good and respected out there on Global Wall and for your consideration … In fact, hard to argue (although that’s still MY inclination) as PCE f’casts going UP …

13 May 2026
Barclays US Economics: First Look: April core PCE inflation estimated at 0.27% m/m

After folding in the April CPI and PPI data, we forecast core PCE inflation at 0.27% m/m (3.3% y/y), 8bp lower than our post-CPI translation, due to weaker-than-expected portfolio management fees. However, with a rebound almost certain, we mark up our Q4/Q4 core PCE forecast to 3.2% (+0.1pp).

13 May 2026
Barclays Thinking Macro: The earnings are real. But does the price signal trouble ahead?

The semiconductor rally has been impressive, but fears of an imminent bubble bursting are overblown, despite superficial similarities to 2000. We are now in a full-cycle semiconductor boom, powered by real revenues and committed capex.

NONE. SHALL. PASS (where ‘none’ is 10yy and by not passing, they mean 4.50%) …

May 13, 2026
BMO: PPI Highest Since March 2022; Components Largely Benign

PPI rose by an impressive +1.4% MoM in April compared to the +0.5% consensus, and March’s initial print of +0.5% was revised up to +0.7%. For context, April saw the largest monthly gain in PPI since the March 2022 gain of +1.7%. Within the details of the release, it was noted that, “Two-thirds of the broad-based advance in April can be traced to a 2.7-percent jump in margins for final demand trade services.” Excluding food and energy, PPI came in at +1.0% MoM vs. +0.3% anticipated, and March was revised up to +0.2% from +0.1%. Backing out food, energy, and trade, PPI registered +0.6% MoM vs. +0.3% surveyed and +0.2% prior. While headline PPI and core-PPI were considerably stronger-than-expected, the items that feed through to core-PCE were largely benign, and the drop in portfolio management offers a meaningful offset to the rise in other components. As a result, core-PCE is likely to retain the +0.3% monthly pace despite the strong showing for the aggregate PPI numbers.

Treasuries sold off on the PPI headlines with 10-year yields reaching as high as 4.488% before a stabilizing bid emerged. Note that the move breached the March 27 yield peak of 4.482%, bringing benchmark rates to new highs since the beginning of the war in the Middle East.

May 13, 2026
BMO Close: 4.50% Rejected

…Wednesday saw most of the major nominal US rates benchmarks reach new highs since the beginning of the war in the Middle East. 10-year notes were bought on the first test of 4.50% since last summer, and while the market has retreated from the local lows, momentum remains bearish and the risk of another range-break is elevated for the time being. Headline PPI nearly tripled the BBG consensus, surging by the most since March 2022. However, the items that feed through to core-PCE were largely benign with the drop in portfolio management fees offsetting the rise in airfares and healthcare costs. As a result, core-PCE is likely to once again rise by +0.3% in April despite the strong showing for the aggregate PPI numbers. That being said, the absence of a sharp acceleration in core-PCE during the first two months of the US-Iran war won’t be enough to convince the market that the impact from the energy shock will be contained to headline inflation rather than triggering a broad-based increase in core inflation…

10s vs 4.50 be like …

SHRINKAGE!!!

May 13, 2026
First Trust: Data Watch - The Producer Price Index (PPI) Rose 1.4% in April

• The Producer Price Index (PPI) rose 1.4% in April, coming in well above the consensus expected +0.5%. Producer prices are up 6.0% versus a year ago.

• Energy prices increased 7.8% in April, while food prices rose 0.2%. Producer prices excluding food and energy rose 1.0% in April and are up 5.2% versus a year ago.

• In the past year, prices for goods are up 7.4%, while prices for services have increased 5.5%. Private capital equipment prices rose 1.2% in April and are up 5.3% in the past year.

• Prices for intermediate processed goods increased 2.7% in April and are up 9.4% versus a year ago. Prices for intermediate unprocessed goods rose 4.1% in April and are up 20.9% versus a year ago.

Implications…If the Iran conflict ends sooner rather than later – and if that brings a return toward oil prices where they were back in February – inflation pressures should ease in the later parts of 2026. Until then, incoming Fed Chair Kevin Warsh and the FOMC are unlikely to do anything with rates. Instead, his early days are likely to be distracted by how to handle current Chair Jerome Powell (his term as chairman ends this Friday) who announced that he will remain on the Fed Board of Governors, which means he will retain a seat as a voting member on the FOMC. That leaves Warsh as a chairman in name only, and any plans to shrink the size of the Fed’s balance sheet will be on the back burner. We expect volatility and uncertainty to continue in the months ahead as the ongoing conflict in Iran puts pressure on oil prices and disrupts global supply chains. However, sustained movements in overall inflation are led by the money supply, which is up 4.6% in the past year versus the 6% trend prior to COVID when inflation remained low. We expect this monetary tightness will eventually bring inflation down, leaving room for rate cuts to restart at some point once the conflict in the Middle East dies down…

… Ordinarily I wouldn’t mind … and the water was cold …

Get. REALZ …

13 May 2026
ING Rates Spark: The evaporation of real yields

Apart from excess supply, the biggest enemy for bonds is inflation. Well, we’ve got some of that to worry about, on both sides of the Atlantic, and the Pacific. The ratchet higher seen in bond yields has been measured and steady. But it risks becoming less measured, if the Strait remains closed and higher economy-wide prices are just allowed to become a thing

…Inflation here there and everywhere

Headline US producer price inflation has hit 6%, and headline US consumer price inflation is approaching 4%. Both of these readings are for April. By the May readings, they’ll be higher still. The US economy will become a base “4% inflation economy.” While the expectation is for inflation to rise into the summer, but then to ease through the fall, we still have to acknowledge the importance of current printed inflation rates. It’s the latest delivered inflation. No ifs or buts or forecasts, it’s simply there.

The level of rates needs to be confronted against the elevated inflation rates that we have right now. The 10yr SOFR is now above 4%, approaching 4.05%. That’s quite close to where printed CPI inflation is, meaning a puny implied real yield. Until inflation actually falls, this remains a relative value negative for rates. A low real yield means holders are barely keeping pace with inflation. Not good for Treasuries.

Meanwhile, the Fed pitches the effective funds rate at 3.64% currently. That’s below headline inflation. Kevin Warsh was finally confirmed by the Senate as the new Fed Chair, but has no chance to cut rates against the current inflation environment, at least not any time soon. In fact, the dominant market discount attaches a greater probability to a hike than a cut as the next move. Also not good for Treasuries, as it pivots the front of the curve higher, placing relative value pressure on higher long tenor rates too…

Data hits, curves steepens … thats just how it was …

May 13, 2026
MS Global Macro Commentary: May 13: PPI and Steeper Curves

Stronger-than-expected US PPI lifted inflation risk; 30y Treasury auction tailed at 5%+; Trump-Xi meeting framed Asia risk; tech led US equities higher; BRL weakened on political risk; DXY at 98.47 (+0.2%); US 10y at 4.47 (+0.6bp)…

…US rates twist-steepened as April PPI exceeded expectations and reinforced concerns that energy and transportation costs were feeding through the production chain (2y: -1.2bp; 10y: +0.6bp; 30y: +0.9bp). The 30y sector cheapened into supply, with the $25bn auction awarded at 5.046% and tailing versus the when-issued level. Demand was weaker than prior sales, with bid-cover at 2.30, leaving the long end less able to rally despite some dip-buying in the belly. Fed commentary also leaned cautious, with officials emphasizing the need to hold rates steady for some time. The curve move was therefore more supply-and-inflation driven than a clean growth repricing…

Covered wagons econ outlook for May … continues thinkin’ Feds NEXT move a CUT

Monthly — May 13, 2026
Wells Fargo: U.S. Economic Outlook: May 2026
Growth Holds Firm as Oil Pushed Inflation Higher, Delays Fed Cuts

Summary

• GDP Remains on an Upward Trajectory: The 2.0% quarterly annualized pace of real GDP in Q1 showed a generally sturdy pace of expansion ahead of the Iran war. The quarterly rise largely reflected resilient (though moderating) consumer spending and strong AI-related investment. Despite recent volatility and renewed geopolitical and trade uncertainty, the initial read on incoming data for Q2 suggests growth has not materially deviated off this path.

• AI Capex and Fiscal Shock Absorbers. Looking ahead, fiscal stimulus should help negate the impact of higher oil prices on the household sector, allowing for a steady pace of consumer spending this year. Meantime, AI-related business investment appears to be accelerating, which should provide an offset to tepid investment in interest rate sensitive sectors such as nonresidential and residential construction.

• Inflation Pressure Lies Ahead. We have slightly pushed up our forecasts for both headline and core PCE inflation. In terms of the headline, higher oil prices are exerting upward pressure on energy prices, with knock-on effects on food inflation likely in train. Meanwhile, core inflation is likely to experience cost-push pressure related to the AI buildout. A moderating trend in shelter costs and fading tariff impacts seem likely to provide a disinflationary counterweight. Still, we now expect core PCE inflation to peak at 3.5% in Q2 and end the year at 3.1%, modestly higher than our March forecast.

…We raised our inflation outlook modestly. We now look for core PCE inflation to end the year at 3.1% on a Q4-over-Q4 basis, up from 2.8% previously

• Labor Market Stable Within No Hire/No Fire Context. The recent string of monthly job gains and continued low readings on initial jobless claims indicates that the labor market is not spiraling downward. Beneath the surface, however, conditions are far from ideal. Low hiring rates and moderating wage growth continue to signal sluggish demand for new workers. In our view, there are not many catalysts for a meaningful pickup in labor demand on the near-term horizon, with delayed monetary easing, heightened geopolitical uncertainty and firms increasingly allocating capital toward AI. Thus, we continue to anticipate a modest pace of hiring in coming quarters and see nonfarm payrolls averaging 55K per month over the balance of the year. The moderate pace of job gains should coincide with the unemployment rate drifting up to 4.4% in Q3, where it is likely to hold through year‑end.

• The Fed’s Next Move Is a Cut. We are sticking with our call for additional monetary easing in 2026. Higher inflation in the wake of Iran war will continue to instill a “wait and see” approach, however, we still view the balance of risks as tilted toward underlying weakness in the labor market, despite recent signs of stabilization. As such, we continue to foresee 50 bps of reductions this year. We remain agnostic on the timing, however are penciling in 25 bp cuts at both the October and December FOMC meetings, somewhat later than our previous forecast.

We have pushed our expectation for the Fed's next cut to Q4 and now look for the FOMC to lower its target range by 25 bps in October and December, still followed by an extended hold at 3.00%-3.25%. Our year-end 10-year Treasury yield forecasts remain unchanged at 4.25% in 2026 and 4.30% in 2027.

Source: U.S. Department of Commerce and Wells Fargo Economics

ReSale TALES …

14 May 2026
UBS: Resilience—economics 1, politics 0

…US April retail sales should also signal consumer resilience even as fuel prices soared. This data does not adjust for inflation and higher prices automatically raise the sales values, but use of savings should also support non-oil sales values.

Federal Reserve Chair nominee Warsh, who publicly denied being US President Trump’s “sock puppet”, received US Senate confirmation by the smallest margin in the history of the Fed. The suggestion of political partisanship of the vote and Warsh’s reputation within the Fed may complicate Warsh’s attempts to engineer rate cuts.

China’s President Xi and Trump have begun talks, but so far the summit is a nothing-burger (if one could afford burgers, with beef prices surging). Speculation about an imminent visit to China by Russia’s President Putin has perhaps been the most interesting development.

Cuts. Hikes. Who cares, when you’ve just gotta keep jacking equity target to stay in the game …

May 13, 2026
Yardeni: From Cuts to Hikes: The Fed’s Shifting Calculus

The April FOMC statement contained an easing bias, signaling that the Fed remained likely to cut the federal funds rate (FFR) over the rest of the year. That bias is becoming increasingly difficult to defend. Three voting members on the FOMC (Hammack, Kashkari, and Logan) already dissented against retaining it at the April meeting of the monetary policy committee. Boston Fed President Susan Collins has since added her voice to those calling for its removal.

The consensus on Wall Street has coalesced around June 16-17 as the next FOMC meeting at which the easing bias will be dropped. The question is whether the easing bias will be replaced with a tightening bias.

The US Treasury market is pushing for that outcome. The 2-year Treasury yield is currently trading above the effective federal funds rate (chart). When 2-year yields trade significantly above the policy rate, the market is signaling that the current FFR is too low to curb inflation and may have to be hiked–and certainly not cut.

A simple removal of the easing bias may not be enough. After five consecutive years of above-target inflation, the Fed may need to signal a willingness to hike (chart).

The data support such a pivot. Consider the following…

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK says … there may be something to all those 70s shows references …

May 14, 2026
Apollo: Higher for Longer Continues

The parallels with the energy shocks in the 1970s are worrying, see chart below and here. The last mile of fighting inflation is a marathon rather than a sprint. Combined with the ongoing fiscal challenges, the bottom line is that there are a lot of upward pressures on rates across the curve, see also here.

An OpED all about unhaPPIness from The Terminal DOT COM …

May 14, 2026 at 4:00 AM UTC
Bloomberg: Is Polaroid coming for today’s stock market?
Market concentration in the AI Boom is even worse than in the Nifty Fifty era.

…UnhaPPIness

US producer prices brought fresh evidence that the oil supply shock is beginning to ripple through into other prices. The producer price index is always more prone to big swings than consumer prices, but an outcome above 6% topped estimates and brings it right to the heights of its historical range since the 1980s — excluding the post-pandemic surge.

There are other signs of building pressures. While gasoline prices naturally hog attention, Bloomberg’s index for all non-energy commodities is also now at an all-time high — even though precious metals, an important component, are down about 15% since their peak in January.

But the price rises aren’t just a function of the oil shock. Grace Zwemmer, US economist at Oxford Economics, argues that these numbers should push the headline Personal Consumption Expenditure deflator, the Fed’s preferred inflation indicator, to 3.8% — its hottest reading since May 2023 and far too high to permit rate cuts.

Beyond oil, she pointed out that prices of electronics components and accessories had risen by 8% month-on-month, as AI demand has created a shortage of memory chips. Electronic components inflated by 27% year-on-year, ending decades of persistent reducing costs. This could throw many companies’ assumptions badly awry.

Until now, as we’ve seen, the sole market reaction to this development has been to send the share prices of chip manufacturers into the stratosphere. It might be wise to guard against some of the potential adverse consequences as well.

CHARTS … I like ‘em and this one is kinda miserable …

May 13, 2026
Daily Chartbook: This kind of divergence has only ever occurred during the post-Covid snapback

1. Misery Index. “Misery Index (CPI y/y + unemployment rate) increased for a fourth consecutive month in April and sits at a 3-year high”.

@lizannsonders

AND repeat after me … it’s DIFFERENT this time …

ZH: Goldman Flags Troubling Mortgage Delinquency Rise Across This U.S. Region

… THAT is all for now. Off to the day job…

Equity futures MIXED (NAZ rallies as JHuang heads to China w/DJT), USTs STABLE and EARL touch lower …

… AND a few thoughts …

Bonds. Jay BONDS. No time for puts … STILL continuing to get through inbox and reacclimate to NOT road-trippin’ AND having one less of the ‘Things’ at home. Thoughts still feel very disjointed and yesterday’s point of data / ray of light serve only to muddy the waters a bit.

Feeling strongest that as Global Wall jacks UP equity price targets and push OUT rate CUTS (or romance idea of hikes) it becomes easier to ‘fade’.

#DipOrTunity feels like the right word and I apologize for overuse …

HOT CPI (more in a min and from Global Wall below) sparked sell-off in rates complex and that makes some amount of common sense…hey, we’ve got inflation > FF and well above ‘target’ (RTRS graphic below). We’ve got negative REAL earnings YET spending appears to remain robust?There are lots of crosscurrents to consider and one of the more relevant / better question is IF this is THE (or a) #DipOrTunity ahead of the month’s last bout of long bonds …

30yy DAILY (bars): watching 5.037, ~5.10 and ~5.15 (May 2025 PEAK) …

… momentum sayin’ MAYBE, stretching (back) up towards being overSOLD enough to cover shorts, romance short-term / rental?

#GotBONDS? Gotta dig deep, back to ‘07, to see these levels (WEEKLY HERE) and Jim Bianco NOTED last night (LinkedIN) …

James Bianco:

The U.S. 30-Year Yield is now 5.03%.

It has only been higher for a handful of days in the last 19 years. And it is now just 8 basis points from a new 19-year high.

#DipOrTunity? … let us HOPE (not a strategy, noted HERE) as most all of Global Wall has recently jacked UP year end equity targets … Crazy as it may / may not be AND despite / because of yesterday’s less than optimal 10yr auction …

ZH: Dismal, Tailing 10Y Auction Sees Lowest Foreign Demand Since Jan 2025 As Yields Soar

… Again, data clearly set the tone for the mess …

ZH: US Consumer Prices Are Rising At Their Fastest Pace In 3 Years

Headline CPI rose 0.6% MoM (as expected), pulling headline up 3.8% YoY (hotter than the 3.7% expected) and the hottest since May 2023...

…But, the surge in the Energy subcomponent of CPI is perhaps peaking as oil has stabilized/eased.

… Perhaps most notably, Real Wages are shrinking on a YoY basis (for the first time since April 2023)...

Finally, are we really ready for a 70s-style rebound in inflation?

Bonds may be hinting but stocks certainly are not, even as consumer sentiment hits rock bottom.

… sorry, but I just can’t find better best combo of data, BBG visuals and snark. Well, maybe this …

WolfST: CPI Inflation Blows Past Fed Rates as Core Services, Gasoline, Electricity, and Food Spike. Fed’s “Real” Rates Are now Negative - The Bureau of Labor Statistics finally corrected part of the CPI distortions in September, October, and November.

… More from Global Wall below … but for now, things summarized in a single Reuters graphic …

Reuters: Locked in a stalemate with Iran, Trump heads to China

…The growing economic toll of the Middle East conflict has started to weigh on markets, following Tuesday’s hotter-than-expected U.S. inflation data.

Graphics are produced by Reuters..

… OFFSET to what would appear to be case for hikes? Sure, we’ve got that …

May 13, 2026
Robin J Brooks: Is US inflation picking up?
There’s NO sign underlying inflation is picking up despite yesterday’s “hot” CPI

…I should clarify upfront that I’m an inflation “dove.” It feels to me like we’re on the cusp of a major automation wave in white-collar jobs that are heavily administrative and repetitive. There’ll be lots of people chasing far fewer jobs in coming years, which will put downward pressure on wages. I just can’t see how - with that as a backdrop - underlying inflation has room to pick up, even with everything that’s going on now…

… Oh forget it … TO The BondBot Intern …

Bonds Smell Smoke, Stocks Smell AI, and the Fed Smells Trouble

Treasuries got clubbed after a hot CPI print, sticky $100+ oil, and Trump boarding Air Force One for Beijing with Jensen Huang like he’s assembling the Avengers of semiconductor diplomacy. The 10-year blew out toward 4.46%, 30-years flirted with 5%, and 2-years jumped as traders quietly replaced “rate cuts” with “uh… hikes?” Oil stayed north of $100 as the Persian Gulf circus rolls on, while Nasdaq futures stabilized on hopes Trump-China talks thaw the AI chip freeze…

…Today’s market felt like 2022 wearing an NVIDIA hoodie: inflation on fire, bonds panicking, and stocks pretending AI can refinance your mortgage.

… not bad, dare I say, getting incrementally better? Learning and soon to fully replace me :) …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 702a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 13 May 2026

• NEWSQUAWK US Market Open: Equities broadly in the green with US/China summit looming; GBP continues lower as domestic politics dominates … Global fixed benchmarks are flat/incrementally firmer, Gilts find reprieve after recent pressure … USTs are firmer by a couple of ticks and currently trade within a narrow 109-31+ to 110-04 range, but ultimately residing near the prior day’s trough at 110-01. As a reminder, US paper was pressured on Tuesday amidst higher energy prices and after a hotter-than-expected US CPI report, which has led markets to reprice hawkishly. Most recently, UBS pushed back its call for a cut at the Fed to December 2026 and March 2027 (prev. forecast cuts in September and December). Focus today will be on US PPI and a flurry of Fed speakers.

• Reuters Morning Bid: Fed alert

…G7 long bond stress intensifies

The relentless rise in long-term government borrowing costs shows no sign of abating, and the list of aggravators is growing by the day. If you’ve been in thrall to gravity-defying stock markets this year, look no further to see where stress is building in world markets.

Debt, oil, inflation and interest-rate risks are combining with domestic political and geopolitical uncertainty, and with ebbing official and private-sector demand for long bonds, to push borrowing costs in the Group of Seven (G7) advanced economies on aggregate to the highest in more than 20 years.

Graphics are produced by Reuters.

…Today’s key chart

Graphics are produced by Reuters.

U.S. consumer inflation jumped again in April, with the annual rate posting its largest gain in three years. Incoming Fed Chair Kevin Warsh says he favors looking at “trimmed mean” inflation cuts that strip out the more extreme price moves each month. But the Cleveland Fed’s “trimmed mean” CPI for April also showed its biggest monthly gain since January 2024, with the annual rate rising to 2.8%.

• Reuters Morning Bid: Inflation up, chips down

…Holdouts against the tide - the case for Fed cuts
The U.S. interest rate outlook has turned decidedly hawkish since the Iran war started, completely wiping out market expectations for Federal Reserve cuts this year. But not everyone has thrown in the towel.

Before the conflict began on February 28, rates futures markets were pricing in around 50 basis points of easing by year end, partly because President Donald Trump’s nominee for Fed Chair, Kevin Warsh, was expected to be more committed to lowering borrowing costs.

But the historic energy shock set off by the war has upended the rates picture. Headline annual inflation is inching near 4% - double the Fed’s target - and the Fed is now expected to remain on hold all year. If it does move, it will be to tighten, current pricing shows.

Many economists have removed their 2026 rate cut calls or pushed them back to next year. But economists at Citi and MUFG are among the few who still think the Fed will be forced to act forcefully this year. Why? Because they believe the economy and labor market are weaker than they appear…

• Yield Hunting Daily Note | May 12, 2026 | EM Income, Abrdn Distributions, Muni HY

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use … Most all of what follows is at very least somewhat connected TO the days CPI release …

A large British operation looking PAST housing quirk …

12 May 2026
Barclays US CPI Inflation Monitor (April CPI): Looking past the shelter quirk

April core CPI accelerated 18bp, to 0.38%, boosted by the one-off upward adjustment to rents and OER CPI. Core goods inflation was soft, indicating waning tariff pressures. We keep our front-month forecasts unchanged, with core CPI expected to increase 3.0% Q4/Q4 this year…

…The upward adjustment to shelter was widely anticipated by economists, the markets and likely the Fed, providing little reason to extrapolate from this particular print. That said, the run of elevated core PCE prints will likely keep the FOMC on the sidelines. We expect the Fed to remain attuned to developments in energy prices and potential supply chain issues stemming from the closure of the Strait of Hormuz in the coming months, and we maintain our call for the Fed to keep rates unchanged for the rest of the year, followed by a 25bp cut in March 2027.

Askin’ the right questions, problem is, nobody knows …

May 12, 2026
BMO Close: Inflation Realized, More to Come?

…Further taking the edge off the slight upside surprise in core-CPI were oneoff jumps in Rent (+0.55%) and OER (+0.53%) as the BLS backfilled the government shutdown-related distortions…

We’re comfortable looking past this adjustment which was a meaningful contributor to the reacceleration of coreservices inflation, which gained +0.5% in April. On the flipside, supercore – core-services ex-Rent/OER – picked up to +0.45% from +0.18% in March. The gain wasn’t particularly troubling given the noise in the update and the fact that nominal wages were benign in April – indicating no immediate evidence of a wage-inflation spiral underlying the latest figures. Moreover, anyone looking for evidence of tariff pass-through from the trade war was left disappointed as core goods rose just +0.034% in April versus the +0.107% March move, marking a four-month low. Recall that Powell’s rationale for leaving rates unchanged this year has been the Committee’s need for confirmation that tariff pass-through was isolated to one-time price adjustments rather than persistent, demand-driven consumer price inflation. Said differently, it was a benign read from the perspective of the fallout from the trade war.

However, it didn’t answer the question of how much the war in the Middle East will impact consumers’ forward inflation expectations…

…In considering the implications from the update, note that real average hourly earnings on a yearly basis were negative for the first time in three years. If nothing else, this is troubling when considering real personal spending in the coming months….

Flowers and ‘FLATION in full bloom …

12 May 2026
DB: US Economic Notes - April CPI recap: Inflation in full bloom

• April’s headline CPI (+0.64% vs +0.87% in March) came in slightly hotter than we expected. However, core CPI (+0.38% vs. 0.20%) came in right in line with our expectations. The year-over-year rate for headline jumped 50bps to 3.8%, while that for core picked up to 2.8% (from 2.6%).

• On the core goods side, declines in household furnishings and medical care commodities helped to offset continued strength in apparel, likely a function of delayed pass-through from tariffs, as well as information technology commodities, which could be a function of AI demand.

• Services were strong, both because of the expected payback in rents from last October’s government shutdown disrupting data collection, as well as energy bleedthrough into core from airline fares and delivery services.

• In terms of the readthrough into core PCE, we are tracking a +0.32% April print, up slightly from +0.30% pre-CPI. This would have the year-over-year rate tick up a tenth to 3.3%. Tomorrow’s PPI data will provide more precision around this estimate.

• Recent Fed communications have leaned more hawkish. At the moment, downside risks to the labor market appear to be receding while upside inflation risks are becoming more openly acknowledged. As these risks have become more balanced, our base case remains for the Fed to stay on an indefinite hold, though uncertainty around this outcome remains elevated.

13 May 2026
DB: Early Morning Reid

…Turning to rates first, that CPI print and worries over sustained costs from a prolonged conflict drove the 10yr Treasury yield (+4.9bps) to 4.46%, its highest since June 2025. The moves were similar for 2yr (+3.7bps to 3.99%) and 30yr yields (+3.9bps to 5.02%), with the latter now just 7bps below the post-2007 high it reached in May last year. That higher US April CPI print showed headline inflation rising +0.6%m/m as expected (+3.8% y/y vs +3.7% y/y exp.) but core inflation slightly beating consensus estimates (+0.4%m/m vs +0.3%m/m and +2.8%y/y vs +2.7%y/y exp.).

In addition to the upside surprise in core, there were a few concerning details within the data. The effects of the Middle East conflict pushed up categories like energy (+3.8% m/m), airfares (+2.8% m/m) and postage and delivery services (+3.5% m/m), while grocery prices (+0.68% m/m) saw their largest monthly rise since 2022. And the Cleveland Fed’s trimmed mean CPI measure came in at +0.43% m/m, its sharpest monthly rise since January 2024. Kevin Warsh has been a proponent of looking more at this measure. Unfortunately it doesn’t seem to be moving in the dovish direction he expected. For more on the release and implications, see our US economists’ reaction piece here.

The hawkish market interpretation was later reinforced by comments from Chicago Fed Goolsbee, who said that the print was “worse than expected” with services inflation being amongst the worst affected. In response, the amount of fed hikes priced by next April rose to a new high of 20bps (+6.0bps on the day). The next big watchpoint for the Fed will be today’s PPI report for April, which our US analysts expect to rise +0.5% for headline and +0.3% for core. So that’s a tough inflation backdrop as Kevin Warsh takes over as Fed Chair later this week, with the Senate confirming him to the Fed Board in a 51-45 vote yesterday while the final vote to confirm him to a 4-year term as Chair is expected today…

Ceilings not floors …

12 May 2026
ING Rates Spark: Hard to see a ceiling for gilt yields

Gilt yields can continue to rise, not just because of political risks, but also on the back of the Bank of England’s quantitative tightening. Meanwhile, US Treasuries continue to feel pain from the never-ending shuttering of the Strait, with April CPI data already high, and set to rise further in the coming months. Not great for core bonds generally

…US inflation added to the pain for Treasuries
Tuesday saw headline US CPI inflation come in at 3.8% year-on-year for April. It was 2.4% before the war. That’s a 140bp uplift, and it’s not done. As it is, we’re set to hit 4% in May. Core hits 3% down the line. A persistence to the war and we risk adding to that. Getting to 5% inflation is quite probable if it goes on and on. From here, we likely have another week of waiting and watching the war given the China summit distraction, with the Strait remaining shut tight. All the while, Treasury yields are pressured higher.

The 10yr, now at 4.45%, has 4.5% in its sights. And once there, it will meet buyers, as that’s a level that flags a structural buy for many players. That said, it can just as easily sail on higher, especially as there is no easing in price pressures to help calm things down. The rise in yields post the CPI release was through higher inflation expectations and higher real yields, and there was also an edge higher in the swap spread. All quite tame so far. More re-pricing rather than outright selling.

But it risks getting less tame ahead. The Fed can’t cut here. And risk assets are pushing the boundaries of positivity (or have been). It’s a cocktail that Treasuries really should not feel comfortable with. Tuesday saw a 10yr auction test. There was a slight tail, which is never great, but no big issue. This, and the 30yr auction on Wednesday, are being helped by the concession built in the past couple of weeks (even if that concession is set to build further, in our view).

REPRICING, aisle 4! AND some mid-year outlooks …

May 12, 2026
MS Global Macro Commentary: May 12: CPI Repricing

US CPI ran "hot"; oil rose as Iran truce hopes faded; USTs sold off after 10y auction tailed; UK political risk pressured gilts and GBP; EM FX weakened; S&P 500 -0.2%; Brent +3.3%; DXY at 98.31 (+0.4%); US 10y at 4.46 (+4.9bp).

…US rates sold off across the curve after April CPI exceeded expectations and reinforced concerns that higher energy prices were feeding into broader inflation pressure (2y: +3.6bp; 10y: +4.9bp; 30y: +4.1bp). Headline CPI rose 0.6% m/m and 3.8% y/y, while core CPI rose 0.4% m/m and 2.8% y/y, with services and supercore components drawing attention. The selloff was initially contained, but duration cheapened into supply as the Treasury sold $42bn of 10y notes at 4.468%, tailing the 4.464% when-issued level. Demand metrics were softer, with the bid-to-cover at 2.40 versus 2.43 previously and dealers taking 12% of the auction. Breakevens rose as the inflation impulse remained front-end led, with the 2y breakeven up 5.7bp and the 5y breakeven up 2.1bp. The combination of sticky inflation, higher oil, and weaker auction demand kept the curve under pressure into the close…

May 12, 2026
Morgan Stanley Insight: Global Strategy Mid-Year Outlook: Constructive, Not Complacent

Strong macro and micro fundamentals—reinforced by a powerful AI‑driven capex cycle—support risk assets despite energy‑led volatility widening return dispersion. With the growing role of credit markets in funding AI capex a headwind for spreads, the balance of risks continues to favor DM equities.

Global equities – DM to outperform: DM equity expected returns in the low-teens are compelling. While the upside is similar across DM, a favorable bull-bear skew and strong earnings from positive operating leverage tilt us toward the US. Sector preferences: US — Industrials, Hyperscalers, Financials, Consumer Discretionary Goods; Europe — Semis, Utilities, Tobacco, Energy, Banks, Telecoms; Asia / EM – Industrials, Semis / Memory, Energy & Materials.

…Equities – US leads the pack: Expect DM equities with returns in our base case in the 12- 13% range to moderately outperform EM equities. US, Europe and Japan have similar upsides but bull-bear skew and strong earnings make us favor the US. S&P 500 at 8,300 by 2Q27, MSCI Europe at 2700 by 2Q27.

…Key Investment Ideas

• This mid-year outlook builds on three themes we have emphasized since last year: running the cycle hot, public to private rebalancing, and a broadening of earnings and performance.

• We see the rolling recovery continuing to progress, driven by a strong earnings environment as positive operating leverage persists.

• Our mid-year 2027 S&P 500 price target is 8,300 (20.5x forward EPS of $404). We see 2026 EPS of $339 (23% growth), 2027 EPS of $380 (12% growth), and 2028 EPS of $429 (13% growth).

• We favor Financials, Industrials, Consumer Discretionary Goods, and the hyperscalers.

G10 rates – curve performance is key: In the US, expect 2s10s to flatten to 40bp in 2Q26, then steepen to 70bp by end-2027, about 15bp steeper than forwards. The front-end drives the curve steepening, while term premium, supply, and oil uncertainty restrain the long end and constrain a bullish duration view. JGBs offer the most risk-adjusted value versus forwards…

…US Treasuries: Oil Tails, Steeper Than Forwards
Key Investment Ideas

• USTs may cheapen versus forwards first, but ultimately outperform as the Fed path reprices lower. Early 2Q26 underperformance reflects oil and demand tails, but by 4Q27 2y and 10y yields sit 48bp and 33bp below forwards, led by front-end and belly performance as the distribution migrates back to baseline.

• Investors should focus more on curve performance. We expect 2s10s to flatten to 40bp in 2Q26, then steepen to 70bp by end-2027, about 15bp steeper than forwards. The front-end drives the curve steepening, while term premium, supply, and oil uncertainty restrain the long end and constrain a bullish duration view.

• Treasury performance relative to SOFR swaps should stay supported by bills, buybacks, Fed RMPs, and regulation. Breakevens stay elevated into end-2026, then ease, while 10y real yields rise toward 1.95% by mid-2027. Nominal gains come from lower inflation compensation more than lower real yields; swaps lag.

Our baseline assumes markets look through the oil shock. Oil stabilizes near $90/bbl in 2026 and falls toward $80/bbl in 2027; US growth slows in mid-2026, but avoids recession as AI capex and fiscal support absorb the hit to real incomes. The outcome for oil provides the caveat: one quarter is a relative-price squeeze, but a second quarter of disruption becomes a policy problem. If gasoline balances stay tight, prices must do more clearing through demand destruction.

Our UST baseline starts as a probability-weighted path of the five scenarios presented by our economists, not a clean read-through from the economics baseline. In 2Q26, we applied the following probabilities: 40% baseline, 15% US aggregate demand, 10% AI productivity, 15% global oil-led recession, and 20% permanent oil premium. The distribution then narrows: baseline probability rises to 50% by 4Q26, 70% by 2Q27, 80% by 3Q27, and 100% by 4Q27. The path keeps both oil tails alive early, then lets the curve migrate back toward baseline as those tails expire.

Our forecast path first cheapens USTs versus forwards, then richens them. The Fed midpoint holds at 3.625% in 2Q26, moves to 3.375% in 3Q26, and reaches 3.125% in 2Q27. We forecast 2y and 10y yields at 4.05% and 4.45% in 2Q26, about 22bp and 18bp above forwards. By 4Q26 they fall to 3.75% and 4.25%, about 15bp and 9bp below forwards. By 4Q27 they sit at 3.45% and 4.15%, about 48bp and 33bp below forwards. We place more weight on our further-out forecasts than the near-term ones. Investors should follow our weekly strategic advice in the near-term…

…Of course, the tails remain wide. Our Treasury bull scenario, built off the global oil-led recession, takes the Fed to 1.625%, the 10y to 3.30%, and 2s10s to 170bp. The bear scenario, built off US aggregate demand, takes the Fed to 4.625%, the 10y to 5.15%, and 2s10s to -50bp. Our forecasts suggest investors should buy duration on early cheapening versus forwards, but express more confidence in steepeners than in a long-end rally…

May 12, 2026
Morgan Stanley Insight: Global Economics Mid-Year Outlook: A Fluid Outlook

Coming into this year, we were constructive on growth and remain so, but with increased caution amid the energy supply shock. Energy volatility generates a wide range of outcomes, particularly on the inflation front. The AI boom remains a critical driver of demand, but its effects on productivity are a wild card. We rely on scenarios to illustrate potential paths for the global economy depending on oil and AI outcomes.

• Global growth is fundamentally supported by continued US momentum in AI-driven capex and high-end consumer spending, which over time should allow for a broadening in macro drivers. China is more insulated than Europe, although in each case the energy shock will damp but not derail the expansion.

• The duration of the energy disruption is consequential – our base case assumes crude back to $90/bbl at the end of the year and further declines in 2027. A more-protracted oil price dislocation would exacerbate growth and inflation risks, and a permanent risk premium for oil would stall the return to target inflation globally. An “escalation” scenario – where oil prices surge through $150/bbl – would mean physical shortages, supply chain disruption, and recessionary outcomes.

• The growth drag and inflation boost from the energy supply shock differ meaningfully across regions – we see only a modest and temporary effect on the US, while Europe is more exposed, with a particularly quick boost to inflation. Across Asia, the variation is high, but North Asian growth is somewhat insulated by fiscal policy.

• Global disinflation was interrupted in 2026 by the energy supply shock but should resume in 2027. That said, even with a rapid resolution, production, shipping, and inventories will require months to normalize.

• Monetary policy has shifted to be less accommodative across the G10 (excluding Japan), but the effect should be temporary if the conflict’s persistence is less than two quarters. We see the Fed cutting in early 2027 after data shows a clear path to disinflation; the BoJ retains its pre-existing hiking path; while the ECB grapples with energy-led inflation in 2026 before pivoting back to neutral in 2027.

Energy and commodity markets, policy choices, and the speed of AI adoption all combine to define growth through 2027. In the baseline, the energy shock slows the global economy modestly through mid-2026 before growth stabilizes and recovers into 2027. We see growth near potential across most major economies. AI-driven capex and fiscal spending on energy security and defense provide a firm floor to prolong late-cycle growth. But we are assuming that the conflict in Iran is resolved in the next month, limiting the effects to one quarter, and that volatility from energy prices subsides over the balance of the year…

HOT, HOT, HOT and getting hotter … AND the impact on Fed call…

12 May 2026
UBS: US Economic Perspectives
April CPI recap: Getting hotter

…Another strong headline increase next month, core more moderate
We expect another strong increase in the headline CPI in next month’s May report with gasoline prices again rising strongly and Nielsen’s sample of food items sold in grocery stores showing a strong 4-week increase through early May. (Figure 19) Currently we project a 0.49% headline CPI increase and a 0.23% core CPI increase. Note that the headline CPI increase is down notably from our projection last weak as a result of falling retail gasoline prices.

We project that inflation rates will rise further in next month’s May report with headline CPI inflation at 4.25% and core CPI inflation at 2.87%. Inflation in May should be at, or very near, its peak for the year. We expect inflation will slow only very gradually over the next couple of years as tariff and oil price shock effects wane…

12 May 2026, 21:44 UTC
UBS: Sticky inflation and supply bottlenecks push back Fed easing

Fed cut timing pushed back: We revise our Fed call to two cuts in December 2026 and March 2027, as the conditions needed to justify a September move—particularly sustained core goods disinflation and reduced supply-side uncertainty—have not yet been met.

Disinflation progress insufficient: Core PCE goods inflation remains too firm, with April tracking near 0.3% m/m, as AI-related software pricing and renewed supply-chain pressures offset disinflation in tariff-sensitive goods categories.

Growth and labor markets support patience: Solid 1Q private domestic final sales (2.5%) and stable unemployment reduce the urgency for near-term easing, leaving inflation dynamics as the dominant policy constraint.

Policy bias remains toward cuts, not hikes: Despite market pricing, the bar for a rate hike remains high given slowing wage trends, anchored inflation expectations, and leadership likely inclined to look through supply-driven inflation—keeping the next move a cut, albeit later…

13 May 2026
UBS: Beefing about prices

US April consumer price inflation was slightly higher than expected—but with of the data being guesswork, and rising fictitious owner’s equivalent rent, it is unwise to overemphasize that. The details do raise political concerns. Since US President Trump took office, coffee prices have risen 24%, beef over 19%, gasoline over 19%, and vegetables 10.5%. These are price increases that consumers notice and remember. Trump claimed not to think about Americans’ financial situation, but markets are betting the president does care (and policy decisions will reflect that).

Trump’s visit to China’s President Xi is not creating too much market interest. Some social media-ready statements are to be expected, but if countries make investment or purchase pledges when dealing with this US administration, they do not necessarily follow through…

…US April producer price inflation does not carry the same political weight as consumer prices. Today’s data should confirm that US firms are passing on higher costs to consumers. As consumers use savings to cover those costs (as they did with tariffs), volumes have not been too affected.

On that LAST note …

AND finally, fresh off increased S&P target over weekend …

May 12, 2026
Yardeni: CPI Heats Up But, Unlike 2021-22, Wages Remain Cool

During 2021 and 2022, a wage-price spiral was exacerbated by widespread global supply chain disruptions and a spike in oil prices following Russia’s invasion of Ukraine (charts). This time, the war in the Middle East has caused oil prices to spike. Some supply chains have been disrupted. But a wage-price spiral is less likely.

…The labor market is in equilibrium this time (chart). In 2021-22, demand for labor significantly exceeded the supply of labor. So, wage inflation should remain much more moderate this time than it was back then (chart).

If so, then a wage-price spiral is unlikely to amplify the inflationary consequences of the supply shock attributable to the Strait of Hormuz blockade (chart).

Unit labor cost inflation fell to 1.2% y/y during Q1 as productivity gains offset increases in hourly compensation (chart). In our Roaring 2020s scenario, productivity should remain a powerful disinflationary force, while wage inflation remains moderate.

…The CPI inflation rate was driven higher by a 6.6% y/y increase in nondurable goods prices, as energy prices rose 17.9% y/y (chart). Durable goods inflation continued to moderate to -0.1% y/y, indicating that the impact of tariffs is diminishing. The services inflation rate edged higher to 3.4%.

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK says we’re (US GOVT FINANCES) not ready for recession …

May 13, 2026
Apollo: US Government Finances Are Not Ready for a Recession

During US recessions, the budget deficit typically widens by around 4% of GDP as unemployment benefits surge and tax revenues collapse, see here.

That would be manageable if the US were entering a potential recession from a position of fiscal strength. It is not. In fact, the US has never entered a recession with this little fiscal buffer, see chart below.

The investment implication is clear: do not expect lower interest rates to bail out valuations. The standard recession playbook that growth slows, the Fed cuts, rates fall and multiples expand breaks down when the sovereign borrower is already stretched.

In the front end, inflation driven by higher energy prices, tariffs and immigration restrictions is proving stickier than the Fed expected, constraining how aggressively it can cut. At the long end, the fiscal trajectory is structurally bearish for bonds. Treasury is already funding record deficits almost entirely through T-bills to avoid putting upward pressure on long yields, a strategy that cannot continue indefinitely. When coupon issuance eventually has to increase, the supply shock will push long yields higher, not lower. And in a recession, the deficit blows out further, requiring even more issuance at precisely the moment when market appetite for duration is most uncertain, see also here.

The bottom line is that rates are staying higher for longer across the curve, and the traditional path to value creation through multiple expansion is largely closed. Value will have to come from the hard work of operational improvement, i.e., earnings growth, margin expansion and cash generation, and not from the discount rate doing investors a favor.

A view from The TERMINAL DOT COM (and a read through on positions) …

May 12, 2026
Bloomberg: Bond Traders Renew Bearish Treasuries Bets on Inflation

Traders have renewed bearish bets on U.S. Treasurys, lifting expectations that the Federal Reserve will raise interest rates as oil prices and inflation push higher.

The hawkish shift has rippled across maturities. At the short end of the curve, interest-rate swaps have resumed pricing a quarter-point rate hike by the middle of next year. Long-dated Treasurys are also under pressure as traders are betting on yields to sustain a move above 5%.

Meanwhile, a selloff in Treasury futures Monday sent 5-year yields further above 4% and sparked a buildup in short positions, including one of the largest new positions in 10-year notes in over a month.

The ramp-up in rate hike odds gained momentum Tuesday after consumer price data showed U.S. inflation accelerated in April due to rising gasoline and grocery costs.

“There’s a decent short base that has been building in the market,” said Kelsey Berro, fixed-income portfolio manager at JPMorgan Asset Management. “The market has been very efficient in repricing to a reality of higher inflation for longer as a function of the increase in energy prices.”

In the options market tied to the Secured Overnight Financing Rate, which closely tracks Fed policy expectations, traders are looking to hedge against more rate hikes being priced into SOFR futures over the coming weeks.

During Monday’s session demand emerged for put options targeting a couple of rate hikes to be priced in by the end of next year. Interest rate swaps currently show around 85% of a quarter-point hike by the April policy meeting, with traders adding to the bets after the latest CPI data.

“Bearish sentiment is rebuilding into the rise in yields with short risk being added to the front end in SOFR and in the belly of the curves,” Citigroup Inc. strategist David Bieber said.

A number of Fed officials have recently pushed back on the presumption that the Fed’s next policy move will be a cut. After Tuesday’s data, Federal Reserve Bank of Chicago President Austan Goolsbee said inflation readings show pervasive price pressures in the U.S. economy and may even indicate an overheating.

“What the market is pricing is a resilient economy and a Fed that is able to stay on hold for a significant period of time,” JPMorgan’s Berro said.

In the cash market, a survey of JPMorgan clients released Tuesday also showed bearish sentiment on the rise, as investor outright short positions rose to the most in 13 weeks.

May 13, 2026 at 4:00 AM UTC
Bloomberg: Warsh could find inflation too hot to handle
Pressure for rate cuts is running into a wall of a reality from the Iran war.

…Too Hot

US inflation is too hot for comfort. The numbers for April reveal that the headline rise in consumer prices reached 3.8%, continuing an upward trend that started before the Iran war and well above the Federal Reserve’s upper band target of 3%. Overall inflation hasn’t been this high in three years:

The greatest problem is, of course, the spike in energy prices driven by the blockage of the Strait of Hormuz. Energy prices are always erratic and there is little monetary policy can do to control them, which is why central banks tend to look at core inflation, excluding both food and fuel. Merely removing energy is enough to bring inflation down to 2.8%. CPI minus energy looks far more contained than it did at the worst of the post-pandemic spike:

However, inflation excluding energy is still rising, while an array of other statistical measures of core price increases are also turning upward. Even if fuel prices are ignored (something that people in the real world aren’t able to do), the median and the trimmed mean (in which the outlying components are excluded and an average taken of the rest) are rising. Sticky prices, which take time to move and are hard to reduce, have ticked back up above 3%, while the Fed’s so-called “Supercore” (services inflation minus shelter) rose sharply. There is more to this than the first-order effects from the oil shock:

The really bad political news is on affordability. Prices can rise without making life less affordable if wages rise faster, which is what usually happens. But last month, consumer prices rose faster than average hourly earnings, for the first time since 2022. This never happened during the first Trump term.

Wages are deceptively difficult to measure. April’s inflation number is still slightly below the 3.9% wage growth recorded by the Atlanta Fed’s wage tracker, which is based on census data, in March. The April figure will be available later this week, but the squeeze on affordability is undeniable:

None of this is welcome news either for financial markets or for central banks…

…Welcome to Washington, Mr. Warsh

Fittingly, the inflation data dropped just as the Senate confirmed Kevin Warsh as a governor of the Fed, to replace the ultra-Trumpy Stephen Miran. Confirmation as next chairman will almost certainly follow.

He arrives just in time for two-year Treasury yields to touch 4%, their highest since June last year, buoyed by the strong market expectation that the fed funds rate cannot move far from where it is now — but that the next move is now more likely to be a hike than a cut:

This is a direct byproduct of the war in Iran, which instantly pushed up both short-term yields and rate expectations. The latest miserable news, with Trump dismissing the most recent Iranian peace proposal as “garbage,” had a predictable effect on oil prices. Futures took December prices for Brent crude back above $90 per barrel to retouch their highs

CHARTS … couple / few good ones and so …

May 12, 2026
The Chart Report: Inflation Fears Are Creeping Back

oday’s Chart of the Day was shared by J.C. Parets.

Inflation-protected U.S. Treasuries are making new multi-year highs relative to nominal treasuries, signaling that the bond market is starting to price in higher inflation.

At the same time, the Bloomberg Commodity Index is pressing into new all-time highs, and pointing to a potential rebound in inflation as its historically tight relationship has diverged in recent years.

If inflation begins to re-accelerate similar to 2021, we could see a meaningful rotation of capital into more areas that are less sensitive to interest rates.

The Takeaway: Following today’s hotter than expected inflation data, we can look to both the bond market and commodities for clues on where inflation may be headed next…

@RachelDashCS

$TNX (monthly) 10-year rates are pushing up against descending trendline resistance of its 3-year long bullish coil... Prepping for decision time

This compression is occurring just below multi-decade resistance around ~5%

Meanwhile, long-term downside momentum has been waning - the MACD is positioning for a bullish monthly crossover

The long-term path of least resistance appears higher for $Rates

9:55 AM · May 12, 2026

at M_McDonough

Here are the only inflation gauges that actually matter the BEC and Cheeseburger Deluxe Indexes, updated.

The divergence is real right now:
BEC w/ Coffee Index: Continues correcting
Bacon Cheeseburger Deluxe Index: Pushing new all-time highs

TLDR: BEC prices are coming down, but burger prices are still going up. Long breakfast, short lunch.

8:47 AM · May 12, 2026

May 12, 2026
Daily Chartbook: “This type of extreme narrow leadership barely existed in earlier decades”

1. Real wages. “With headline inflation coming it at +3.8% y/y in April, that means real average hourly earnings growth (adjusted for CPI) slipped into negative territory for the first time since April 2023”.

2. Redbook Index. Same-store retail sales jumped 9.6% YoY for the week ending May 9 (7.8% prev).

RECORD LOW, you say…?

May 12, 2026
Glassdoor Employee Confidence Index: A new record low

Employee confidence plummeted in April, reaching a new record low, according to the latest data from the Glassdoor Employee Confidence Index. The share of employees reporting a positive 6-month business outlook crashed to 43.8% in April 2026. The decline follows a significant downward revision to March 2026 from 47.1% to 45.1% with the complete month’s worth of data in. The U.S.-Iran war and subsequent increase in energy prices appears to be pulling down employee confidence, even if it took several weeks to take hold in workers’ psyches.

… Finally, thinkin ‘bout a haircut this weekend to show off my new tattoo …

… THAT is all for now. Off to the day job…

Equity futures slip, bonds trip as EARL RIPS …

… AND a few thoughts …

Bond markets here, there and nearly everywhere are on the backfoot. Again. Yes, EARL bid and it’s also likely USTs are following UK Gilts …

Reuters: Britain's Starmer resists pressure to resign
Bloomberg: UK 30-Year Yields Top 1998 High as Political Crisis Deepens

… #DipOrTunity ahead of This weeks reFUNding? May just be and the #DipOrTunity continues ahead of today’s $42bb 10s so lets jump in …

10yy DAILY (bars): 4.50%, 4.55/7 and 4.30 on my radar screen

… with momentum (stochastics, bottom panel) closer to being overSOLD — so, #DipOrTunity — than not …

#Got10s? … for a WEEKLY look and some actually intelligent thoughts, check out BMOs closing thoughts below…

Let us HOPE (not a strategy, for more on this theme, see below), this afternoons auction a tad better than yesterday’s 3yy …

May 11, 2026, 1:04 PM
BMO: 3-year auction tails 0.6 bp -- softer end-user demand

• Today’s 3-year auction was soft with a tail of 0.6 bp and non-dealer bidding of 83.1% vs. an 87.3% average.

• 3-year auction stops at 3.965% vs. a six auction average of 3.633%.

• Bid/Cover was 2.54x compared to an average of 2.67x.

• Dealers took 16.9% vs. a 12.7% average.

• Directs claimed 20.1% vs. a 23.4% norm.

• Indirects were awarded 63.0% vs. an average of 63.9%.

• Before the auction, Treasuries were selling off on light volumes and 3-year notes went into the bidding deadline at the session lows. Since the results, the cheapening has extended in the follow-through.

Bond market remains UNSETTLED and that makes some sense. Stocks continuing along to the moon while the ‘flation print is straight ahead, well, should handcuff rate CUT odds. Today. Doesn’t mean that ship has completely been turned ‘round in the SoH …

The longer things go along as they are — economy APPEARS to be fine here, ‘stateside’, jobs, URATE, EARNINGS, etc … stocks continuing to give off that ALL IS WELL signal as the undercurrents and hurdles / potholes are literally hiding in plain sight …

FT: Kevin Warsh to face resurgent inflation and an impatient Trump as Fed chair

…“He’s coming into office in complicated circumstances, to put it delicately,” said David Wilcox, a former Fed economist who is now at the Peterson Institute think-tank. “He really is caught in an impossible situation between a president who is insistent on rate cuts and an inflation scenario that is problematic.”..

Bloomberg: Bond Market’s Warsh Trade Falls Apart as Oil Fans Inflation Risk

…Not long ago, the Treasury market thought it had the Kevin Warsh trade figured out: Simply bet on the multiple interest rate cuts that the nominee had been expected to deliver if he got the job to lead the Federal Reserve.

Now, with days left before Warsh steps into the central bank’s top role, a different view is emerging. Instead of rate cuts, wagers in the $31 trillion bond market are leaning toward tighter monetary policy, the upshot of robust US growth and war-driven inflation worries. Yields on 30-year Treasuries are nosing at 5%, while bets on a steeper yield curve — an outgrowth of the market’s earlier easing expectations — have largely been undone

Warsh Trade Proxy of a Steeper Treasury Curve Quickly Faded

…It’s not that investors think Warsh has suddenly abandoned his belief in the need for both rate cuts and Fed balance sheet reduction. Rather, they sense that the incoming chair — who’s mocked in some circles as a “sock puppet” to President Donald Trump for espousing rate cuts — will find himself just as bound to the economy’s twists and turns as his predecessors.

“The thing that will dictate his actions are events, rather than ideology,” said Adam Marden, co-portfolio manager of the Dynamic Global Bond Strategy at T. Rowe Price…

Bloomberg: BofA drops blunt warning about Fed rate cuts

BofA Global Research is the latest brokerage to revise its ​Federal Reserve rate-cut forecast to much later dates, citing elevated inflation due to high energy prices and growing strength in the labor market.

… Just when Global Wall thought they’d had it all sorted out, bets placed and easy money ahead (don’t get me wrong, still expected to be stellar bonus season), some facts / inputs changed.

Fine.

Today’s data inflation data will reflect energy and will continue to do so for long time to come. The ivory tower PhDs will at some point likely in the near future suggest ‘the market’ and global economy can / will adjust to higher prices IF they remain … the YoY comps will ‘eventually’ fade.

It will be Festivus for the restofus, who don’t live in theory but rather, in reality of it all. Unless, of course, you are blessed with an interim COLA adjustment to your paystub, this will hurt as they suggest it’s not.

Case for cuts remains, then, despite what Global Wall has been doing — pushing out cut f’casts, trading these expectations represented via the CME FedWatch tool HERE) … We’ll continue to see the political class throw some bones (federal gas tax, beef, who knows what next up the sleeves) …

As far as DATA which is, in theory, highly correlated TO the price of money (aka mortgage rates) are concerned, lower rates (?) didn’t help used home selling much …

ZH: US Existing Home Sales Disappoint In April, Despite Lower Mortgage Rates

…Total existing home sales SAAR hover just above 4.00 million homes...

…“Even though it’s the highest inventory post-Covid, we are not close to the pre-Covid April inventory of 1.83 million,” Lawrence Yun, NAR chief economist, said on a call with reporters.

Contract closings rose in the Midwest and South, according to the NAR. They fell to a three-month low in the West.

Finally, it appears home sales are becoming less and less elastic relative to mortgage rates (which had fallen notably during the period of reporting)..

Source: Bloomberg

And, as the chart shows, mortgage rates are recently on the rise again...which will not help the situation at all…

… Oh, forget it … still trying to get back into the ‘swing of things’ and yesterday’s market machinations — holding in while EARL suggested the opposite — is another reflection of WHY Global Wall gets paid the big bucks.

As a friend and client overseas used to remind me, if the majority were right, the majority would be rich … Hey, at least we’ve all got access to an ‘intern’ … here’s what MY BondBot Intern thinkin …

THE BOND MARKET JUST SENT KEVIN WARSH A “WELCOME TO HELL” FRUIT BASKET

Treasuries got smacked overnight as oil kept climbing ahead of this morning’s CPI print, with WTI roaring back above $100 while the 10-year pushed toward 4.45%, the 30-year flirted with 5%, and the 2-year crept near 3.95% as traders suddenly remembered inflation is still a thing. Stocks wobbled, the dollar firmed, and rate-cut fantasies got repriced faster than airline tickets before a holiday weekend. The bond market is now treating incoming Fed Chair Kevin Warsh like the guy inheriting a flaming restaurant kitchen. CME FedWatch odds for cuts have collapsed since the Iran war began. Americans should brace for pricier mortgages, pricier gas, and pricier excuses from economists.

“Nothing says ‘soft landing’ quite like $100 oil and a 5% long bond.”

… not bad. Get those 10yr auction bids in early and often …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 700a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 12 May, 2026

• NEWSQUAWK US Market Open: Starmer vows to stay on and fight; USTs softer as US CPI awaits … A bearish start for fixed income as energy benchmarks climb after overnight rhetoric (see the feed for more), and with the intensifying scrutiny around UK PM Starmer weighing on Gilts and dragging peers lower as well … Bunds and USTs began the morning with modest losses, of a handful and around 20 ticks, respectively. While USTs haven’t dipped much further, they are down to a 110-06+ low ahead of US supply and CPI. If the pressure continues, we look to 110-00+ from last week before the 109-24 contact low from March.

• Reuters Morning Bid: Ceasefire on life support

…Today’s key chart

Graphics are produced by Reuters.

U.S. consumer prices likely raced higher for a second straight month in April, which would result in the largest annual increase in inflation in more than 2-1/2 years and bolster expectations that Federal Reserve interest rates will remain on hold this year.

In the 12 months through April, the CPI is projected to have advanced 3.7% - the biggest year-on-year increase since September 2023 following a 3.3% rise in March. Aggravated by the Iran-related oil shock, gasoline prices likely accounted for most of the increase in the CPI last month after a record surge in March…

• Yield Hunting Daily Note | Nov 18, 2025 | Selloff Continues, BDCs? , FMY/TSI Buys For Safety, PIMCOs Cheap!

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use …

Housing data reflecting impact of prices and mortgage rates … imagine that …

11 May 2026
Barclays US Economics Research: April existing home sales show slight gain on multi-family strength

Existing home sales rose 0.2% m/m in April to 4.02mn, on the heels of a decline in the prior month that was revised up alongside today's data. Sales remain below pre-pandemic trends due to residual effects from price and mortgage increases since the pandemic.

YOLO and FOMO remain drivers of retail calculus … so, too, does ZERO COMMISH …

12 May 2026
Barclays U.S. Equity-Linked Strategies: From GameStop to Game Theory: The New Retail Investor

Retail enthusiasm to buy dips and chase rallies faded since last year as sentiment has dropped. Riskier participants likely found other outlets in new non-financial channels for speculation (i.e., prediction markets). The last few weeks sparked some re-engagement; we see room to run…

…We think this marks a subtle shift in marginal price-setting behavior by retail investors. As is well-known, the shift to zero-commission trading in 2019-2020 marked a clear inflection point for equity markets, unlocking a structurally higher baseline of retail activity (Figure 4). Retail investors have arguably since moved from being a marginal player to a more persistent and market-relevant force, with several commentators, including ourselves, highlighting their growing influence on equity flows, short-term price action and options demand. What was once episodic engagement has increasingly become a meaningful component of market dynamics, particularly during risk-on phases…

They say patience is a virtue …

May 11, 2026
BMO Close: Timeline for Patience

…The Treasury market traded in a relatively narrow range on Monday, despite opening weaker on Trump’s rejection of Iran’s latest proposal to end the war and reopen the Strait of Hormuz. Energy prices remain elevated and the war in the Middle East is the single most influential factor in the US rates market at the moment. We’re not anticipating any material progress toward a peace deal in the near-term and, as a result, the market’s focus on the issue will be centered on the bullish tone in the oil market. $100/bbl is a line in the sand for front-month WTI crude and as long as oil stays in double-digit territory, we suspect that investors will look elsewhere for trading inspiration. The fundamentals haven’t surprised sufficiently to overshadow developments in the Middle East and we find ourselves reluctant to assume this will change anytime soon.

This isn’t to suggest that Tuesday’s inflation data won’t trigger a market response; it certainly will. Rather, the pace of realized inflation is intertwined with the energy sector in such a way that it’s difficult to disentangle the two…

…Technical Analysis
…10s – 4.30%-4.40% has contained much of the price action in the 10-year sector of late. First resistance is an opening gap at 4.305% to 4.301%, followed by a volume bulge around 4.30%. Below, we see the 50-day MA at 4.281%, then a clear line in the sand at 4.25% – a level that we expect would be met with selling interest. Note that daily and weekly charts favor lower rates in the near term. Overhead, first support is a sizeable opening gap at 4.399% to 4.424%. Through there, the Bollinger Band top comes into view at 4.447%, then a local yield peak at 4.462%. Overhead is the late-march high yield mark at 4.482%, also the top of the 9-month trading range…

AI and labor market — a chartbook on heels of Friday’s data …

11 May 2026
DB: US Economic Chartbook - Tracking the effects of AI on the US labor market (May 2026)

In this edition of our monthly chartbook tracking the effects of AI on the labor market, we have added new data from the Census on how firms are using AI (e.g., to perform an existing task, complete a new task, enhance existing workforce, etc.). One of the most interesting findings from this new data is that there is a noticeable negative relationship between AI adoption rates at the sector level and the net share of firms that are using AI to perform a new task less perform an existing task. In other words, on average sectors that have higher AI adoption rates are more likely to use AI to perform an existing task than a new task.

…Firms using AI are mostly using it to “supplement or enhance” employees

Significant share of firms have not yet changed employment levels due to AI

Summarizing the rest of the chartbook: Firm-level AI adoption rates remain relatively low across sectors and states but are expected to rise (charts 2-8); job openings have been stable and are outperforming in some AI-exposed occupations like software engineers (charts 10-17); layoffs remain low, and there is limited evidence of a positive correlation between AI adoption and aggregate layoff metrics (charts 19-29); there does not appear to be an adverse impact on wage growth, though wages are decelerating more quickly on average in AI-exposed sectors (charts 31-35); and although unemployment rates have declined for young workers on balance in recent months, they are still elevated relative to 2019, especially so for college educated individuals (charts 37-42)…

EARNINGS … globally it’s TECH driving growth

11 May 2026
DB: Asset Allocation - Q1 2026 Global Earnings: Tech Drives Robust Growth

• Global earnings growth at a 4-year high, driven by Tech. The Q1 reporting season saw solid earnings beats in the US, near average beats elsewhere. Global earnings growth rose sharply from 15.3% in Q4 to 22.6% in Q1, the highest in over 4 years, driven by strong growth for Tech in all regions on the back of AI-related demand, Energy & Materials on higher oil and commodity prices and for the Financials.

• Across regions, high concentrations of Tech companies that benefit from AI-related demand saw extremely strong headline growth in the US (25%) and in EM (29%), and the lack of which held back growth in Europe (4%). Earnings growth in Japan (29%) was also very strong, led by the Financials.

• Consensus for 2026 has been rising in all four regions with estimates for double-digit growth. 2026 estimates have been revised upwards around the world, modestly for Europe and notably for EM, the US and Japan. Within EM, estimates are sharply higher for Korea and Taiwan, i.e., big beneficiaries of AI-related demand, and for Latam and EMEA following the increase in oil and commodity prices. The consensus sees double-digit growth in 2026 for all regions.

• Robust equity market performance outside Europe. Equities have risen strongly in the earnings season so far, with the MSCI ACWI up 6.1% since the start of the earnings season, buffeted in part by optimism on resolution of the war in Iran. Performance has been led by EM (12.2%) and Japan (11.2%), followed by the US (6.5%), while Europe (0.4%) is flat.

AND a few words on GILTS as they have been and will be an input to the UST trading day calculus …

12 May 2026
DB: Early Morning Reid

…Looking ahead to today, UK politics are set to be in the headlines again with a Cabinet split over support for Prime Minister Keir Starmer emerging yesterday. The FT reported that three ministers had asked the PM to consider his position. Starmer had said on Monday that he would not resign after suffering major losses in the UK local elections last week. But with his speech yesterday delivering little of note, aside from plans to nationalise British Steel and introduce a new EU youth scheme, more Labour MPs called on the PM to step aside in its aftermath, with the total number rising above 70. With a Cabinet meeting expected this morning, today could be a big day in determining Starmer’s future. In response to the uncertainty, 10yr UK gilt yields rose +8.6bps to 5.00% yesterday, whilst the 30yr yield rose +9.3bps to 5.67%, given expectations that a new Labour leader may face pressure to ease the fiscal rules and raise gilt issuance…

‘HOPE is not a strategy, right? An interesting and pragmatic (not as blatantly and ONLY foreverly BULLISH as you might have expected from this source …)

Date: 5/11/2026
First Trust Monday Morning Outlook - The Bull Case is Largely Based on Hope

The stock market is on an absolute tear, with the Nasdaq up 5% last week and nearly 13% year-to-date. The proximate causes include a cease-fire somewhat holding with Iran, a 28% surge in S&P 500 corporate profits in the first quarter, and some consensus-beating economic reports, like Friday’s payroll numbers.

We have been cautious on this market…and overly pessimistic up to this point. So, should we rethink that? Should we become more optimistic about stocks?

The optimistic case was summed up in an X post by James E. Thorne at Wellington Altus who said there is a “systematic underestimation of an AI-driven productivity revolution…a Cap Ex Super Cycle, [an administration that is] letting the economy run hot, and multiple expansion [due to] a Peace Dividend. History suggests that when productivity waves coincide with supply-side policy and geopolitical de-escalation, as in the 1990s, both earnings and multiples expand beyond historical norms.”

Let’s go through this list one item at a time…

…while many positive developments are taking place, the idea that we are entering into a long-term secular bull market seems a stretch. The PE ratio on trailing earnings of the S&P 500 is currently near 29. When Reagan entered office and cut both tax rates and spending, and broke the back of inflation, the PE ratio was 8. Even if policies today were equally as good, the same kind of boom should not be expected.

We aren’t pessimistic even though it might sound that way. The US (as it has done for 250 years) is pushing back against feudalism in all its forms. At the same time, AI is a transformative technology. But it will take time for these things to fully play out, and we think markets are underestimating the time, energy, and volatility it will take.

Global Wall — rates, specfically — hold well despite (because?) the (lack of)news…

12 May 2026
ING Rates: The hidden force pushing gilt yields to record highs

The 10Y gilt yield hit new highs on the back of inflation and political risks, but investors should not ignore the role of the Bank of England’s QT in this. We estimate the 2s10s GBP curve steepened by 60bp more than the USD curve due to the increased gilt supply and the divergence can continue. This could also be a lesson for Warsh who may look to walk a similar path …

…Global term premia are strongly correlated but domestic factors play a role too

…QT seems to play a part in explaining a 60bp steeper GBP 2s10s curve

11 May 2026
ING Rates Spark: A lot not to like for bonds

Tough to see much progress on the US-Iran “talks” this side of the Trump-Xi summit. As we wait, Treasuries feel pain. EUR rates still closely follow the bear-flattening/bull-steepening dynamic alongside oil prices. It’s not just oil as a driver for gilt yields; they remain pressured higher by worries politics could get fiscally more expansive

Another wait; takes us to the weekend. Another week, and US Treasury stress ramps
Given the importance of the US-China bilateral summit this week, the war with Iran is put on the back burner as a front-and-centre issue; at least for President Trump, probably. The messaging is clear – patience, and no agreement given what Iran came back with. In consequence, inflation expectations are re-ratcheting higher, and the US 10yr yield is back above 4.4%.

Assuming minimal progress and no lasting agreement for the rest of this week, the odds favour a trek in the direction of 4.5% for the 10yr yield. So far it’s been steady and measured, and there, in fact, has been no material selling of Treasuries. Most of the yield movement has been a repricing in line with higher inflation risks. We run the risk of some outright selling, a more disorderly market.

We’ll see CPI inflation on Tuesday, which will confirm headline inflation for April rounding up to 4% and core inflation rounding up toward 3%. Plus, there is every reason to expect that solidified from the subsequent May readings. With 10yr SOFR in the 4% area, it’s only marginally above where headline inflation will print.

That tight real interest rate outcome keeps the pressure to the upside for nominal rates…

Discussions stall’ markets continue to climb the wall …

May 11, 2026
MS: Global Macro Commentary: May 11: US-Iran Discussions Stall

US-Iran talks stalled; oil and yields rose; UK political risk hit gilts; yuan rallied pre-Trump-Xi; EM FX weakened; S&P 500 +0.2%; Brent +3.1%; DXY at 97.95 (+0.1%); US 10y at 4.41 (+5.9bp)…

…US rates sold off across the curve as oil prices rose and traders repriced inflation risks tied to the ongoing Middle East conflict (2y: +6.9bp; 10y: +5.9bp; 30y: +5.2bp). The move began in Asia after President Trump and Iranian officials rejected each other’s latest proposals, reinforcing concerns that disruptions around Hormuz could persist longer than previously expected. Treasury losses accelerated after a weak $58bn 3y auction, which tailed at 3.965% versus a 3.959% when-issued level. The bid-to-cover fell to 2.54 from 2.68 previously, while dealers absorbed 16.9% of the sale, above recent averages. Market participants also pointed to heavy IG corporate issuance and rising oil-driven inflation expectations as additional headwinds for duration. Inflation-linked pricing moved higher across the curve, led by the front end, with the US 2y breakeven up 8.6bp and the 5y breakeven up 5.5bp. SOFR and Fed pricing also shifted modestly hawkish, with traders continuing to trim expectations for near-term easing amid resilient labor-market and earnings data…

… as far as ‘the wall’ … well, THIS

Freedom isn’t free and there are always costs associated …

12 May 2026
UBS: The political costs of affordability

In 1972, US President Nixon focused on the electoral risks of rising hamburger meat prices, ultimately imposing government control of wages and prices. Yesterday, US President Trump signaled concern about today’s US affordability crisis, signing executive orders attempting to lower beef prices (up over 16% since January 2025). Trump also urged temporarily ending the federal gasoline tax—that would increase fiscal borrowing, but only offset a small part of recent price increases.

Trump warned about the Iranian ceasefire’s survival. Oil prices moved a little, but Trump’s comments have reduced market impact nowadays. Food and energy prices are expected to increase headline US April consumer price inflation, with core rates steady. However, food and energy have outsized importance in setting inflation perceptions, as higher frequency purchases…

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK says … ALL IS WELL (or at least not gettin’ worse’er’er) …

May 12, 2026
Apollo: In Credit Markets, Things Are Getting Better, Not Worse

Default rates are falling, distressed exchanges are declining and the number of liability management exercises are declining, see charts below.

The bottom line is that the economy is strong and there are no signs of a full-blown credit cycle…

Not happened since 2009 had me at HELLO …

Mon, May 11, 2026
BESPOKE: Documenting the Rally

The S&P 500 is now up more than 17% since its late March low, and it’s 7% above its 50-day moving average. The tech-heavy Nasdaq 100 is double that at 14% above its 50-DMA!

As shown below, the last time the Nasdaq was this far above its 50-DMA was in late 2009 in the early days of the post-Financial Crisis recovery.

Within Tech, the Semis continue to soar to levels not seen since the Dot Com Boom and Bust of the late 1990s/early 2000s.

As shown below, the Philadelphia SOX semis index is currently 33% above its 50-DMA, a level only hit three other times: December 1998, March 2000, and November 2002.

I saw this next chart on the internet so it must be true … actually fascinating to consider how stretched stocks are relative TO bonds …

at MarketMike

1:00 PM · May 11, 2026

… back TO housing … who’d a thunk high prices and mortgage rates might ever show an impact …

May 11, 2026
WolfST: Supply of Existing Single-Family Homes Rises to Highest in 10 Years, Condo Supply Highest since 2012, Sales in Deepfreeze - April was another bad dud for spring selling season and supply piled up.

Sales of existing single-family homes that closed in April seasonally adjusted were unchanged from March, at an annual rate of 3.64 million sales, near the very bottom of the deepfreeze range that has existed for the past three-and-a-half years, according to data by the National Association of Realtors today…

Finally, a few words / thoughts on the economy brought to us all by the letter, “K” as in KETCHUP …

ZH: Kraft Heinz CEO: "Consumers Are Literally Running Out Of Money Toward The End Of The Month"

…While the digital US economy, if proxied through the earnings growth and stock prices of AI companies and their “picks and shovels” support ecosystem, has never been stronger, the traditional US consumer, responsible for 70% of US GDP, has rarely been more depressed than right now (and according to the latest University of Michigan sentiment survey, Americans have literally never been more pessimistic).

That was the take home message from the latest earnings week, when various executives across retail, restaurants and packaged goods indicated they are increasingly worried about US shoppers - especially those from the” lower half” of the K-shaped economy - with tighter budgets amid surging gas prices caused by the Iran war, and consumer electronics prices through the roof thanks to record memory chip prices.

“They’re literally running out of money at the end of the month,” Kraft Heinz CEO Steve Cahillane said in an interview with the WSJ . “We’re seeing negative cash flows in the lower-income brackets where they’re dipping into savings.” Sure enough, last week we showed that as a result of personal spending growth far outpacing personal income...

…Americans are putting less away as they try to keep up, with the savings rate dropping in March to the lowest in three years. Meanwhile, economists warn the disruptions from the war in Iran could lead to higher prices for a range of goods over time, including groceries, putting even more pressure on low-income households and draining what little savings are left.

Low-income consumers have already cut back on real gasoline consumption to try to limit costs, according to recent research published by the Federal Reserve Bank of New York…

Global Wall on RATE CUTS be like …

… THAT is all for now. Off to the day job…

Equity futures and bond prices DIP as EARL grinds back UP …

… AND a few thoughts as I catch back up …

I’m quite sure I’ve missed LOADS since I’ve been out BUT Monday, 3s closed ‘round 3.97 and today are just ‘bout 3.95 and this, despite / because ALL that I’ve missed.

EARL closed ‘bout 106.29 and currently below 100 … so we’ve got THAT going for us, which is nice …

This weeks reFUNding kicks off today with $58bb 3yrs and while NOT the very first thing I checked this morning (EARL, daily BARS back to 2017), I’ll lead with a quick look at setup …

3yy DAILY (bars): 3.95, 4.00 then …

… momentum middlin’ — NOT MUCH of a (bearish) signal — so any sort of continued concession (ie #DipOrTunity) in rates space likely to be welcomed …

… Moving right along and NOT wasting much more of your time as I am still going thru my limited ‘Global Wall inbox’ — some highlights below — I’ll head right to THE INTERN for a few words …

Oil’s Back From the Dead… and Bonds Immediately Started Sweating.

WTI crude ripped back toward $100 after the “peace deal with Iran” trade lasted about as long as a New Year’s gym membership, pushing Treasury yields higher again with the 2yr near 3.92%, 10yr around 4.39%, and the 30yr sniffing 5%. Stocks? Barely blinking. S&P futures are only modestly lower because apparently AI can now offset geopolitics, inflation, gravity, and common sense simultaneously. The bond market remains the adult in the room, repricing sticky inflation risk as higher oil threatens another unwanted CPI cameo just ahead of this week’s inflation data. For Main Street, this means mortgage rates stay painfully elevated and the Fed stays trapped between “higher for longer” and “longer than anyone voted for.”

Wall Street’s latest strategy: pray for disinflation while bidding oil, tech, and denial all at the same time.

… AND move right on along …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 700a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 11 May, 2026

• NEWSQUAWK US Market Open: US equity futures little moved despite lack of US-Iran progress … USTs and Bunds off worst levels as energy benchmarks dip from overnight highs … Fixed benchmarks are generally on the backfoot as energy benchmarks opened higher and extended at the start of the week as the negotiating process made no progress on the weekend, with the US and Iran essentially rejecting each other’s positions. We now await any revised proposal(s) before looking to the meeting between Chinese President Xi and US President Trump, from Wednesday … USTs hit a 110-15 low, with downside of just under 10 ticks, early doors. Since, as the energy space wanes from highs, fixed income has lifted off worst. USTs are now lower by around five ticks and to a 110-23 peak. If the upside continues, we look to resistance at 110-28 and 111-03+ from Thursday and Friday, respectively.

• Reuters Morning Bid: 11 weeks and counting

• Yield Hunting Weekly Commentary | May 10, 2026 | Tech CEFs, PIMCO, TYG Rights

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use …

Best in the biz SAY … EARL continues to be THE driver …

May 8, 2026
BMO US Rates Weekly: Mercurial May

In the week ahead, the energy sector will continue to set the tone for US rates as optimism regarding a peace deal with Iran has diminished. Crude oil has stabilized just below $100/bbl for the moment, but the longer the Strait of Hormuz is impassable, the more upside risk becomes apparent. Global demand destruction remains a medium-term concern while the upside implications for headline inflation pose an immediate worry. Tuesday’s CPI report will be closely followed, and expectations are for a headline print of +0.6% with core seen advancing +0.3% in April. An as-anticipated inflation update would contribute to investors’ perception that it remains an energy (and potentially food) issue at this stage, as core prices have been left comparatively unaffected. This dynamic is unlikely to persist indefinitely and there will surely be some evidence of passthrough to components of core consumer prices given the magnitude of the supply shock. The wildcard is whether core is identifiably higher as a function of pass-through before the Strait reopens and there is stability in the Middle East…

…Our third chart helps illustrate the fact that the daily changes in 10-year yields and the front-month WTI crude oil contract have been directionally consistent in 72% of trading sessions since the beginning of the US-Iran War. To be clear, the candlestick pattern represents 10-year yields, and the candlesticks are colored green on days when 10- year yields and oil moved in the same direction, and gray on days when rates and oil moved in opposite directions. Impressively, between April 14 and May 6, the daily changes in WTI crude oil and 10-year yields were directionally aligned for 17 consecutive trading sessions.

In other words, the US rates market has been trading almost entirely off the real-time fluctuations in energy prices, which are being informed by the newsflow regarding the Middle East. The war continues to overshadow and outweigh all other potential influences. Investors continue to lament this trading dynamic but begrudgingly respect it. Frankly, it’s difficult to imagine a near-term decoupling between rates and oil given that the energy shock is the single most important factor driving monetary policy decisions for major global central banks at the moment.

…Technical Analysis
…3s – First support in the 3-year sector is a wide opening gap at 3.948% to 3.971%. Overhead. The Bollinger Band top at 4.004% resonates with the handle change. Through there is the post-FOMC highwater mark at 4.013%, then the top of the 12-month trading range at 4.034%. Conversely, first resistance is the Bollinger mid at 3.849% before a slight opening gap at 3.824% to 3.799%. 3.75% is the next line in the sand, then we see little until 3.70%, the Bollinger Band bottom at 3.695%, and the bottom of the local trading range at 3.694%. A range-break would find resistance at the 100-day moving average, currently 3.671% …

…10s – 4.30%-4.40% has contained much of the price action in the 10-year sector of late. First resistance is an opening gap at 4.305% to 4.301%, followed by a volume bulge around 4.30%. Below, we see the 50-day MA at 4.281%, then a clear line in the sand at 4.25% – a level that we expect would be met with selling interest. Note that daily and weekly charts favor lower rates in the near term. Overhead, first support is a sizeable opening gap at 4.399% to 4.424%. Through there, the Bollinger Band top comes into view at 4.447%, then a local yield peak at 4.462%. Overhead is the late-march high yield mark at 4.482%, also the top of the 9-month trading range.

30s – First support in the 30-year sector is a wide opening gap at 4.977% to 4.987%. If filled, we see a clear bearish hurdle at 5.0%, then the Bollinger Band top at 5.012%. Through there is the May 4th close of 5.015%, then the top of the 10-month trading range at 5.034%. Overhead is an isolated yield peak at 5.075%. Conversely, first resistance is the recent focal point in long bond trading at 4.90%. Below, we see a void of resistance until the Bollinger Band bottom and 100-day MA come into view at 4.849% and 4.846%, respectively. 4.818% is the bottom of the local trading range, and should we see a durable range-break, the 200-day moving average becomes relevant at 4.80%….

Large German bank REMAINS SHORT 10s and ‘engaging’ mkt, fading HIKE pricing …

8 May 2026
DB: US Fixed Income Weekly

Since the hawkish April FOMC meeting, hike pricing through Q2 next year has persisted, with SOFR option spreads implying roughly even odds of a hike, a hold, or cut by the December meeting and additional hikes priced for the first half of 2027. As we noted last week, this has produced a notable “hump” in the Fed path pricing with flies centered on SOFRH7 and SOFRM7 elevated relative to the rest of the strip; a path that we view as unlikely to play out given downside labor market risks and potential for an earlier resolution to the conflict in Iran. Job gains in April were solid, although the unemployment rate ticked up slightly. Accordingly, we initiate a short position on the SOFR Z6M7Z7 fly – i.e., receive M7 against Z6 and Z7. Swap spreads rallied following this week’s QRA as Treasury kept guidance around coupon sizes unchanged despite market expectations for softening of the guidance language. Perhaps more surprising was the TBAC charge on investing excess TGA cash into repo, a policy that could meaningfully ease funding conditions. The news triggered a sharp rally in 1y1y SOFR/FF, which now sits just below our target of -3.5bp. While there are many open questions and challenges regarding implementation that make it difficult to price the full effects of the policy, we believe it could be an effective way to mitigate funding pressures and continue to await news on liquidity deregulation that could push the basis wider.

Polymarket SAYS …

11 May 2026
DB: Early Morning Reid

…It has now been 73 days since the war in Iran began, with the past 32 marked by a stalemate characterised by a mix of truce and ongoing ceasefire. The absence of any meaningful kinetic activity for over a month suggests to me a firm US preference for reaching a deal. However, a counterpoint is that uncertainty over who holds negotiating authority in Iran may be complicating progress and delaying more difficult times ahead. It remains an unusual conflict with little action now for a month. In simple terms though, as long as the Strait of Hormuz stays closed, markets remain on a knife edge. Polymarket currently assigns a 50% probability to it fully reopening by 30 June.

The latest is that oil and yields are up again this morning as President Trump has posted that “I have just read the response from Iran’s so called ‘Representatives’” which he went on to call “TOTALLY UNACCEPTABLE”. This was based on a WSJ report that suggested Iran was offering to transfer some of highly enriched uranium to another country but wouldn’t dismantle its nuclear facilities. Iran’s official news agency has disputed the report anyway. Brent is up +4.23% and 10yr US yields are up +3.5bps. However US and European equity futures are largely flat and Asian equities are largely higher on the AI trade. The KOSPI is on fire again with the index up +4.0% as semiconductors surge again. The index has crossed +85% YTD…

Same German shop takes STOCK of STOCK RALLY …

08 May 2026
DB: Investor Positioning and Flows - Taking Stock Of The Rally

The S&P 500 is up 16% since the late-March bottom, clearly a massive rally, albeit not unprecedented. We saw similarly sharp rallies after the Liberation Day reprieve last year and during the pandemic rebound. To put the rally in perspective, we would make several observations.

The S&P 500 is back up to the bottom of its medium-term trend channel. As we have pointed out several times previously, the S&P 500 had been going up in a very strong trend channel since the 2022 bottom, then went sideways for 4 months before the Iran war selloff took it well below, and the rally in the last 5 weeks has brought it back up to the bottom of the channel. The catchup echoes that seen after the Liberation Day relent last year and, if the pattern continues, the S&P 500 should now start grinding higher along the bottom of the channel. The S&P 500 is 10% above its 200-day moving average, still below prior highs. Mega-cap growth & Tech (MCG & Tech) stocks have rallied from the bottom of their decade-long outperformance channel versus the rest of the S&P 500 and are approaching the upper end but not there yet…

From German shop BEARS to ‘Merican BULLS (remaining bullish BECAUSE there are too many haters?) …

May 8, 2026
MS USTs Gazump Bond Bears After Payrolls; Reveals Positioning | US Rates Strategy

If oil prices rise, Treasury yields rise. But if oil prices fall on a deal, the door opens wide to halcyon days and a US economy raring to take advantage – taking yield higher as well. That's why Treasury underweights seem appealing to many. But we stay long USTs and in yield curve steepeners.

Key takeaways

• An underwhelming Treasury market reaction to a large upside surprise on nonfarm payroll growth suggests the marginal investors sit short duration.

• Generally hawkish commentary from FOMC participants leading investors on raised the bar higher for economic data to generate a further Treasury sell-off.

• Meanwhile, the oil complex continues to drive price action in the Treasury to a frustratingly large extent – leaving investors with less conviction than usual.

• Our trades stay long duration: long 5-year Treasuries, long 5-year TIPS real yields, keep 7s30s steepeners and 2-year UST SOFR spread longs.

• Investor focus should turn to the April CPI, PPI, and import price reports. Our economists see a firm core CPI in April at 0.36% m/m – above consensus.

…United States | Too many shorts, stay long
What’s not to love about another payroll beat?

What’s not to love about another payroll beat? The fact that many increasingly expect them. From the moment the FOMC statement suggested “the unemployment rate has shown some signs of stabilization” in January – after just one month that showed the unemployment rate ticked down – labor market optimists came out of the woodwork.

And now with the last 2 months showing >100k jobs created, the chorus will likely grow louder.

• Put aside help the labor market received from weather over the past six months – an extreme amount of support as shown in Exhibit 1 and Exhibit 2.

• Put aside that 5 of the past 12 payroll reports now show negative monthly payroll growth, with the 6m average upturn driven by weather in March (see Exhibit 3).

• Put aside that the household survey shows more people lost employment than gained employment in 7 of the past 12 reports (see Exhibit 4)…

…Over the past 12 months, the labor market only produced 21k jobs each month on average. Many believe this reflects a decline in monthly breakeven payroll gains (our economists estimate 50k - similar to the 6m average payroll gains at 55k). Many also believe that as long as the unemployment rate doesn’t rise, this situation can sustain itself in perpetuity.

However, the nonfarm payroll income proxy takes issue with this idea. The labor market produces nearly 70% of personal income (see Exhibit 7). The drivers of income from the labor market – in the aggregate – include the total number of jobs the people work, the number of hours they work at those jobs, and the amount they get paid per hour of work.

Exhibit 8: US private nonfarm payrolls income proxy M/M 3MMA vs. pre-pandemic trend

If the labor market doesn’t produce many new jobs, and the number of hours people work at those jobs – in aggregate – doesn’t rise much, then wages need to rise in order for aggregate incomes to rise. The good news: wages rise every year. The bad news: wage growth continues to decelerate.

The private nonfarm payroll income proxy shows the result. Over the past year, and even over the past 3 months when payroll growth increased strongly on average, income growth from the labor market decelerated to a growth rate well below its pre-pandemic average (see Exhibit 8).

This decline in labor market income raises questions. If the US economy is ~70% spending, income drives most spending, and the labor market drives ~70% of income, then how can economic growth hold up over time without total jobs, aggregate hours worked, and wages increasing faster?

The low level of payroll growth, even if breakeven growth matches it – keeping the unemployment rate low – does not seem like a stable equilibrium. The forthcoming deceleration in core inflation our economists project, alongside this unstable equilibrium – requiring faster payroll growth, not just low, but stable growth – keeps us bullish on the US Treasury market and in yield curve steepeners…

Oil prices stay HIGH, then what …

May 11, 2026
MS Global Economic Briefing: The Weekly Worldview: Oil Price Persistence in the Economy

Oil supply and demand are in a precarious balance, which will have material implications for economic forecasts…

…To emphasize the risks around oil price persistence, we reference our oil strategist’s latest Oil Manual featuring US gasoline consumption. Retail gasoline prices above $4 per gallon have not yet produced clear demand destruction, so the market remains supply-driven. US imports have stalled while exports have continued, dramatically reducing supply very quickly. US gasoline inventories went from 4% above seasonal averages in March to 4% below in April. Typical demand would push US gasoline inventories below 200 million barrels by late August, the lowest seasonally adjusted level in modern data…

Deal or NO DEAL??

11 May 2026
UBS: Accepting the totally unacceptable

Last week’s Axios newswire report that Iran and the US were “moving towards” a deal have (again) proved to be less than accurate. US President Trump declared Iran’s response to US peace overtures to be “TOTALLY UNACCEPTABLE”. The basic problem for markets remains—reopening the Strait of Hormuz depends on Iran, there is little information about the Iranian government’s position, and information from other sources (including the US) cannot be considered reliable.

China’s April consumer and producer price inflation were higher than expected, with energy-related costs offsetting food price declines. China’s government exerts considerable control over energy prices. Allowing prices to increase might suggest a desire to slow demand—possibly motivated by a belief that supply disruption will continue for some time.

The scheduled summit between China’s President Xi and Trump, due to start on Wednesday, has little impact in financial markets. China has little incentive to pursue “gold bar diplomacy,” and social-media-ready statements on investment or soybeans are rarely taken too seriously by investors…

An UPdated PRICE for stocks AND in lieu of any weekly of my own, a calendar of events for your review…

May 10, 2026
Yardeni: MARKET CALL: Raising Our 2026 S&P 500 Target Range Due To Earnings-Led Meltup

We are raising our year-end S&P 500 target from 7700 to 8250. We’ve been bullish on earnings but not as bullish as the recent consensus of industry analysts. We’ve never seen consensus earnings expectations rise so quickly for the current and coming years as they have in recent months. The result has been an earnings-led meltup in the stock market.

Our 2026 and 2027 EPS estimates have been $310 and $350, respectively, since late last year. Those were bullish estimates back then. Consensus EPS estimates have rocketed above our targets in recent weeks…

May 10, 2026
Yardeni: ECONOMIC WEEK AHEAD: May 11-15

The S&P 500 closed Friday at 7,398.93, another record high. The index is 9.2% above its 200-day moving average. Earnings have done the heavy lifting so far this year. The Q1-2026 earnings reporting season is winding down, with companies representing 1% of the S&P 500’s market cap reporting this week and another 12% the following week…

…The week ahead is dominated by inflation reports, with both April headline CPI (Tue) and PPI (Wed) expected to push above 3.5% y/y, as the average national retail gasoline price climbed to $4.58 per gallon, and nearby gasoline futures to $3.53, last week (chart). The Trump-Xi meeting (Thu and Fri) is the most under-discussed event on the calendar and the most consequential, particularly with the Iran conflict still unresolved and Beijing’s posture on the war and tariffs all in play. Finally, we will see the appointment of Kevin Warsh as Fed chair when Jerome Powell’s term as chair ends (Fri).

With that said, here are the key releases most likely to shape investors’ thinking this week:

(1) Inflation. The Cleveland Fed Inflation Nowcasting model has Tuesday’s headline CPI rising 0.45% m/m, enough to push the annual rate to 3.56% y/y, up from 3.30% in March. Core CPI looks more benign, rising 0.21% m/m, with the annual rate edging down to 2.56% y/y from 2.60% (chart). More consequentially, May’s preliminary Nowcast points to headline inflation rising to 3.89% y/y, a trajectory that would constrain Warsh from easing monetary policy from day one.

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK says … concentration risk has NOT gone away …

May 09, 2026
Apollo: Top 10 Companies Account for 34% of Profits in the S&P 500

The share of S&P 500 profits captured by the 10 largest companies has doubled since 1996, see chart below. The S&P 500 is not a diversified index anymore, it is dominated by a small number of extraordinarily profitable tech companies.

Terminal DOT COM noting bond king buyin / likin’ bonds …

May 8, 2026 at 9:58 AM EDT
Bloomberg: Gundlach Takes Longshot Bet in Case of US Debt Restructuring

(Bloomberg) -- DoubleLine Capital’s Jeffrey Gundlach is repositioning some of his funds for the extreme scenario that the US government could choose to restructure its debt in response to a potential future recession.

EARNINGS helping stocks win …

May 8, 2026
FACTSET: S&P 500 Earnings Season Update: May 8, 2026

At this late stage of the earnings season, the S&P 500 continues to report impressive results. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above recent averages. As a result, the index is reporting higher earnings for the first quarter today relative to the end of last week and relative to the end of the quarter. In addition, the index is reporting its highest earnings growth rate since Q4 2021.

Overall, 89% of the companies in the S&P 500 have reported actual results for Q1 2026 to date. Of these companies, 84% have reported actual EPS above estimates, which is above the 5-year average of 78% and above the 10-year average of 76%. If 84% is the actual number for the quarter, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise since Q2 2021 (87%). In aggregate, companies are reporting earnings that are 18.2% above estimates, which is also above the 5-year average of 7.3% and above the 10-year average of 7.1%. If 18.2% is the actual number for the quarter, it will mark the highest surprise percentage reported by the index since Q1 2021 (22.2%). Historical averages reflect actual results from all 500 companies, not the actual results from the percentage of companies that have reported through this point in time…

STOCKS WINNIN’ …

May 10, 2026
Global Markets Investor: The S&P 500 gained for the 6th straight week. Weekly market recap, trading week 19/2026

…The S&P 500 closed at a fresh all-time high on Friday, rising for a 6th consecutive week, its longest weekly winning streak since 2024.

The Nasdaq 100 is up +28% from its lows, with the $SOX Semiconductor Index surging +10% this week alone, its 6th straight weekly gain and up +66% from the lows.

Yet market breadth remains deeply narrow, with institutional investors quietly reducing exposure into record highs. Just 22% of S&P 500 stocks have outperformed the index over the last 30 days, one of the lowest readings in 30 years…

POSITIONS … got MORE SHORT THE LONG END and cannot help but think this matters into this weeks reFUNding …

9 MAY 2026
Hedgopia CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned

…30-year bond: Currently net short 172.9k, up 59.3k.

JUNK BONDS flashin’ warning cannot be a good sign YET … stocks continue winning …

May 08, 2026
McClellan: High Yield Bonds Flash Warning - Chart In Focus

The daily Advance-Decline (A-D) Line for high yield corporate bonds is making a bearish divergence versus the SP500. This is a concern because it conveys a message saying that there are liquidity problems…

…But let me say this again: This is not a trend change “signal”. It is just a warning of trouble, and one which could get rehabilitated. It will bear watching in the days ahead, especially as the calendar now transitions into the worst 6 months of the year.

Formerly all star charts dude lookin’ at interest rates earlier last week …

May 5, 2026
TRENDLABS: The Bond Market Tsunami Is Coming

Long-term interest rates are back to where they were just before the 2007 peak that led into the Great Financial Crisis.

The yield on the 30-year Treasury bond is now above 5% and knocking on the door of fresh 18-year highs:

Let that sink in…

…Remember, interest rates stopped falling the moment the Fed started cutting.

Yes, you read that right.

In September 2024, the Fed began its latest rate-cutting cycle. They control the federal funds rate. That’s their tool.

The rates that matter to us, mortgages and the 10-year, are driven by the market.

And those had been trending lower for a full year after peaking in 2023.

Then the Fed stepped in.

And that’s exactly when yields bottomed:

From that point forward, rates across the curve turned higher. Not eventually. Immediately.

That’s not coincidence. That’s a divergence between what people think is happening vs what is actually happening.

That’s the bond market telling you it sees something very different than policymakers.

And when you get that kind of disagreement, history is pretty clear about who tends to win…

…Over the past few years, the 10-year and 30-year yields have been stuck in wide but well-defined ranges near multi-decade highs.

A lot of movement inside the range, but no real resolution:

To most people, this just looks like noise. It’s not. It’s pressure building.

Volatility in rates has been getting squeezed. Tighter ranges, failed breakouts, no follow through.

That kind of environment doesn’t stick around.

Volatility mean-reverts. Compression leads to expansion.

… I’m sure I’ve missed LOADS while I was out but … THAT is all for now. Off to the day job…

Equity futures and bond prices DOWN cuz EARL SAYS so …

Tasnim News: Iran Announces New Control Zone in the Strait of Hormuz

Investing.COM: FARS says 2 missles hit US warship, US DENIES

Bloomberg: Oil Rises as Market Monitors US Plan to Help Ships Exit Hormuz

CNBC: Oil prices rise as Trump plans to ‘free’ ships stranded due to Mideast conflict

… AND a few thoughts …

Fitting start and end to the week (for me … out after today, story, excuse, explanation over the weekend, HERE) …

With the aformentioned headlines and EARL continuing to drive ALL other markets, and all other markets not knowing whatever next, well … I’ll lead with visual of EARL as much as it pains me to do so …

EARL, monthly (LINE): $110/bbl

… not yet overBOUGHT …

#GotEARL?

Pains me to be out of my ‘comfort zone’ but then, it would be fitting to see high / rising gas prices as I set to embark on a rather lengthy road trip … Moving during the pandemic was fun. Then, buying a used car during it, too … so why NOT then road trip with gas prices at these levels??

Forget it … EARL impacting all of us even those on Global Wall … over weekend some (JPM) raised year end f’casts and others remain long as rates rise. Trailing stops close. Today you’ll note below yet others marking to market their FOMC cut calls (punt ‘TIL 2027) and all makes sense and, well, when the facts change … you know the rest.

Wishing lots of luck to KWARSH and almost feel like JPOW one of the luckiest men in the room …

I’ll quit while I’m behind as I ask my BondBot Intern what’s on HIS mind …

Oil Headlines, Bond Headaches, and the Strait of “Wait…What?”

Since Friday’s 4pm close, Treasuries did what they always do when geopolitics turns into theater—yields popped, then thought better of it. The 10Y flirted higher toward ~4.55%, 30Y nudged ~4.70%, while the 2Y held near ~4.95% as oil spiked on “Iran shot / U.S. didn’t notice” headlines and the Strait of Hormuz opened, closed, and reopened like a bad retail store. Equities wobbled, then shrugged.

Why? Bonds are pricing a familiar cocktail: higher energy = sticky inflation = Fed staying grumpy.

For Main Street, that means mortgages stay expensive and relief stays theoretical.

Punchline: The bond market doesn’t trade headlines—it trades the hangover.

… indeed, it does … Moving on …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 705a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 04 May, 2026

• NEWSQUAWK US Market Open: Trump says US is to “guide” ships through the Strait, though Iran threatens attacks on those attempting to enter … A slightly bearish start to the week, though conditions are thin on account of holidays in China, Japan and the UK … USTs down to a 110-15+ trough this morning, hit by an uptick in energy, which reverberated through on a wider airing of comments from Iran regarding the US’ activity around Hormuz. At most, USTs have been lower by 5+ ticks. Ahead, we await remarks from Fed’s Williams and then the financing estimates ahead of refunding later in the week.

• Yield Hunting May 2026 Newsletter | Earnings Are Inflecting Supporting Stocks

• Yield Hunting Daily Note | May 1, 2026 | CAGE Autocallable ETF, FCO/FAX Merger, JOF Buy

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use … NOTING, too, WEEKEND OBSERVATIONS (click HERE) offered something from bulls, bears and those who’ve CHANGE (increased) year end yield targets …

A large British bank UPDATING FED CALL … when the facts change, they change, what do you do, sir …

4 May 2026
Barclays Federal Reserve Commentary: Outlook change: Inflationary pressures from higher energy prices delay FOMC cuts

With energy prices expected to be elevated throughout 2027 amid the Iran conflict, we mark up the trajectory of core inflation and nudge down our growth forecasts. With the timeline for bringing down inflation elongated, we now expect only one 25bp Fed cut through end-2027, in March 2027.

Our oil strategist’s updated price projections (Energy Sigma: Shifting gears, May 1, 2026) now assume that Brent prices will peak at $115/b in the current quarter before edging down only gradually to $100/b in Q4 2026, averaging $100/b for the year as a whole. He also maintains his view that risks are skewed toward higher prices if the Strait of Hormuz disruption does not improve in the coming weeks. The revised trajectory of WTI has been marked up similarly, with the price peaking at $105/b in Q2 and averaging $93/b for the year. While the year average has moved up by $10 (WTI) for 2026, the persistence is higher in the current scenario relative to our prior baseline…

…We view risks around our baseline more balanced than previously, though we continue to view risks to oil prices and the inflation outlook as tilted to the upside, if disruptions to traffic through the Strait of Hormuz persist. In that case, we would expect the FOMC to delay rate cuts even further. Conversely, if the unemployment rate were to rise suddenly – eg, as a result of a sharp slowing in consumer spending or a drop in real investment – we would expect the FOMC to cut more rapidly and aggressively…

4 May 2026
Barclays Thinking Macro: Living off the insurance

A historic oil supply shock has so far failed to derail global markets, as inventories and prior overproduction cushion the blow. But every passing week now increases the risk to the world economy.

…The world has some runway, but now every week hurts more
But every passing week now hurts the world economy more. There are no more new tankers arriving, and the world is eating into its inventories at a much quicker pace; our estimate is that inventory drawdowns are now up to as much as 80mn barrels a week. We suspect the IEA report for April will paint a much darker inventory picture than it did in March. The SPR release is not indefinite either, and some countries (including the US) are running fairly low on SPR reserves.

Furthermore, keep in mind that consumers and businesses do not consume oil, they consume refined products. In that regard, the US DOE inventory report from last week is worth reviewing: distillate (eg, diesel, jet fuel) days of supply on the most recent week of demand stood at just over 18 days, versus a five-year seasonally-adjusted average of over 23 days; gasoline looks better at over 22 days (just a day shy of the five-year average), but consider that the US is only now preparing for its summer driving season.

So how much longer is the runway for the world economy? Our guesstimate is that summer 2022 is a reasonable point of comparison. Oil prices were near current levels that year for a few months as the Russia-Ukraine conflict kicked off. But compounding matters further in 2022 was the fact that global inventories were significantly lower than now (before adjusting for demand). Our best guess is that – if status quo persists – inventories will be in a similar precarious state by late May.

In other words, the next few weeks are the runway that the world economy has left, before demand destruction really kicks in. In The day after (the Middle East conflict ends), our oil analyst estimated that delaying normalization of the Strait to end of May from end of April was worth $20/bbl for Q2 26 ($130/b Brent vs $110), and $13/bbl for the full year ($111 vs $98). The clock is ticking.

Time for caution
We have been generally positive on risk assets through much of this crisis. As early as March 11, in ‘60 Million Frenchmen cannot be wrong,’ we argued that markets were pricing in a benign outcome for this crisis, but for good reason. In the quarterly Global Outlook, Cracks, but not a crater, released on March 26, we recommended overweighting global equities over fixed income, even as the Iran war raged on. And on March 24, our equity analysts increased their earnings and S&P price targets in Discounting doubt: Raising ’26 SPX EPS.

Since then, US earnings have delivered – in spades. But after one of the strongest April months on record for equities, we worry that markets have decided that the energy shock simply doesn’t matter anymore. If so, we disagree – this is a crisis delayed, but not yet averted. It is time, we think, to turn cautious on risk assets.

The analogy is a household that loses its income and lives off savings. Month one feels fine. Month two is manageable. Month four is when you start skipping things. The world economy is somewhere around month two. The savings account is still positive. The bills are still being paid. But the balance is declining, and nobody has found a new job yet.

The buffers worked. They were designed for exactly this. But they were designed for a disruption, not a new normal. And every week that passes without a resolution moves us a bit closer to the point where the insurance runs out.

From a shop who’s BULLISH bonds even as trailing stops growing closer …

May 3, 2026
MS IDEA: Sunday Start | What’s Next in Global Macro: 11 Seconds

…Taken together, we think this presents a worse skew for credit versus equities. Continued strength in spending may support broader markets but mean heavy credit supply and upward pressure on spreads. If spending weakens, the broader hit to sentiment and risk appetite could catch credit in its wake.

Yet an even stronger thread running through this story is its competitive nature. The biggest AI spenders are some of the largest, wealthiest companies in history. They see AI as a long-term opportunity with an enormous total addressable market. The stakes, and the difference between being ‘first’ and ‘fourth’, are enormous.

If that seems like a fair assessment, something else follows: (relative) price insensitivity. Less sensitivity to what the components cost. Less sensitivity to what the borrowing costs. Less sensitivity to short-term swings in the share price. What matters is winning a race that still has many miles to run.

How that evolves has macro implications too. Kevin Warsh, nominee to be the next Fed Chair, believes that these investments can boost productivity and justify lower interest rates (see last week’s Start for more on this debate). But price-insensitive demand for the AI buildout could also put upward pressure on prices, as it is already doing for everything from memory to power.

How fast this investment grows, how price-insensitive the spenders are, and how productive the new models become are all major debates playing out in real time. But for those of us who will never design a chip or construct an LLM or wire 11,000 GPUs together, there is still something powerful about watching formidable competitors, battling it out mile after mile in one heck of a race.

May 4, 2026
MS Global Economic Briefing: The Weekly Worldview: Central Bank Reactions

Central banks are broadly in a holding pattern, prioritizing flexibility as energy shocks dominate the outlook. Policy paths are increasingly driven by two-sided risks…

…We begin with the Fed. The April FOMC meeting marked a shift in tone, indicating the committee’s view that the easing cycle would be pushed further into the future. The dissents and Powell’s comment showed us that the bar for rate cuts got much higher. Given the strength of US growth and five years of above-target inflation, the global oil supply shock means the Committee is in no rush to cut rates. If the inflation path remains unchanged, with tariff inflation receding and oil-driven inflation largely excluded from core, we see cuts pushed from Sep-26 to 1Q27, when the disinflation will be more apparent. If inflation goes and stays higher, however, the cuts could disappear. Powell did retain optionality, describing policy as only mildly restrictive while explicitly not ruling out hikes.

Exhibit 1: The FOMC meeting indicated a higher bar for cuts, and we see cuts pushed out to 1Q27. The ECB highlighted two-sided risks but more growth data are necessary.

May 4, 2026
MS Weekly Warm-up: Earnings Strength Continues

Resiliency this earnings season is broader than appreciated with a median stock EPS growth rate of 16% and a beat rate of 6% (strongest in four years). Further, EPS revisions breadth has resumed its ascent with the momentum coming from Semis, Financials, Industrials and Consumer Cyclicals.

…Moving Parts on the Monetary Policy Side: The Fed signaled a less dovish reaction function at last week’s FOMC meeting given solid growth/labor data and the potential for commodity-led inflation risk. While the Fed is now in the transition period to a new Chair, Kevin Warsh also alluded to a patient approach around further rate cuts at his Senate confirmation hearing. With the bond market pricing out cuts, investors are focused on potential equity market impacts. Our work shows that equity index returns are historically strong (mid-teens range) over a 12-month period when the Fed is on hold and earnings growth is above the long-term median (8%). Index upside is only slightly stronger (high-teens range) when the Fed is cutting and earnings growth is above the long-term median. The bottom line is that a strong earnings backdrop, which we expect over the next 12 months, is the main driver of upside in both outcomes. The near-term risk from the Fed is more related to liquidity tightness if they were to underestimate how much capital the real economy is now using for investment and the rolling recovery. Markets could periodically reflect this risk via higher bond volatility and/or tension in funding markets. A stronger dollar could also play a role in this dynamic. The Treasury (Buybacks) and Fed (Reserve Management Purchases) have tools in place to deal with tensions should they arise and are likely to do so in a reactive, rather than proactive manner.

…Fed and Treasury Impacts on Markets
Over the past several months, the bond market has gradually priced out the cuts that were assumed coming into the year and is even now pricing in a greater chance of hikes than cuts through July of next year, albeit modestly. If we were to ask most equity market investors for their view on how the Fed has pivoted this year, almost all would likely indicate the Fed has turned incrementally hawkish. Looking just at the rates dynamic, we would agree and it’s one of the primary reasons why equity multiples corrected so much over the past 6 months (S&P 500 P/E down -18% peak-to-trough and still down around -10%). As the exhibit below shows, the recent P/E rise from the lows has outpaced the re-pricing of fed funds futures for October 2026.

Exhibit 8: P/E Multiples Took A Hit Amid Iran Conflict and Fed Re-Pricing; They Have Stabilized but Remain ~10% below Peak

However, this ignores a very important aspect of activity by the Treasury and Fed over the past 6 months in an effort to control bond volatility and funding market stability. As noted in our research for months, the equity market correction began last fall with a tightening in funding markets. This is also when P/E multiples peaked for the S&P 500 and equities more broadly. The Fed noticed this stress at the time and decided to end QT earlier than planned to address it. When that action failed to fully calm the funding market stress, the Fed decided to reactivate asset purchases with its Reserve Management Purchases in December which had its desired effect (Exhibit 9). This injection of liquidity quickly translated into a stable P/E near 22x, but led to a surge in gold and silver prices as some market participants viewed these asset purchases as simply another form of QE and/or monetization of the debt via greater bill issuance to be sopped up by the Fed.

As noted, the decline in P/Es was severe in March at the index level, and it was much more significant for certain parts of the equity complex. Besides the repricing of the policy rate, we believe rising bond volatility also played a role and got the attention of both the Fed and Treasury as is typical. Enter Treasury buybacks which increased substantially in March and April to $100-125B ($1T+ annualized). In our view, this had its desired effect of reducing bond volatility substantially (Exhibit 10). As a side effect, it also helped to propel equity multiples higher. Net-net, this decrease in bond vol and slightly less hawkish pricing on Oct fed funds can help to explain the rebound in equity multiples to where we are trading today (21x). Looking just at Exhibit 8, one might argue multiples have outpaced their implied move. But, when looking at Exhibit 10, one could argue multiples could rise more.

The answer likely lies somewhere in between, and the fact that earnings results are far exceeding expectations is another argument for higher, not lower multiples. We have been arguing for months that the correction in valuations more than accounted for the risks facing the market. That argument is even stronger in the case of the hyperscaler/Mag 7 stocks which we upgraded near the end of the correction in early April. Just like with the S&P 500, multiples have rebounded, but arguably not as much as they could or should. We think the liquidity risks are keeping a lid on valuations but are unlikely to be material enough to cause valuations to compress in a notable way without a new shock…

A rather large SWISS bank on guidance and …

04 May 2026
UBS: Diminished guidance

US President Trump posted on social media that the US will “guide” commercial shipping through the Strait of Hormuz. Media reports suggest this will not involve naval escorts. Iran’s parliamentary security committee head Aziz called the posts delusional. The oil market reaction gives weight to the Iranian view. US gasoline prices are approaching USD 4.5 per US gallon, which is an incentive for the administration to use calming rhetoric to guide markets. This has less impact as the point of physical shortages moves closer.

There is a pontification of central bank speakers on the agenda—no fewer than six from the European Central Bank (ECB). There is genuine uncertainty about ECB policy, so signals of what the central bankers are looking at would be helpful. Federal Reserve president Williams is also speaking. As a competent economist, William’s words carry weight…

Finally, stocks going from lower left ot upper right AND in addition TO economic calendars offered over the weekend …

May 3, 2026
Yardeni: MARKET CALL: Up, Up & Away

The stock market balloon is climbing higher, and the burners are firing. It isn’t all hot air that is lifting stock prices. It’s also earnings revisions, which are increasing for 2026 and 2027. Growth stocks and the Magnificent-7 have reasserted leadership over the past month. Small caps and the Russell 2000 are at fresh record highs too. Investor sentiment remains surprisingly lackluster, leaving plenty of upside for the balloon. Even the soft spot in private credit is showing signs of stabilizing.

The question is whether the balloon is actually a bubble. We don’t think so. Consider the following:

(1) Stock prices. The S&P 500 market-cap-weighted and equal-weighted indexes have rebounded significantly since they bottomed on March 30 (chart). The former has risen to a record high, and we expect the latter to follow suit. Both of their 200-day moving averages (dma) are trending higher.

…Investors are starting to nibble on private credit ETFs (chart). The Virtus Private Credit ETF (VPC) and VanEck BDC Income ETF (BIZD) both have rebounded off their recent lows (chart). Commercial bank loans and leases continue to rise, reinforcing our Financials thesis that the stress in the credit market is localized rather than systemic.

(2) Earnings. S&P 500 forward operating earnings has hit a fresh record high of $346.19 per share (chart). Consensus EPS estimates now stand at $327.87 for 2026 and $380.79 for 2027, and both appear still to be rising. Forward earnings is the single best leading indicator of stock prices, and it continues to point higher…

…3) Valuation. US stocks are still cheaper than they were at the end of last year. The forward P/E of the S&P 500 is at 20.9, well below the 23.0 peak at year-end 2025. MidCap’s forward P/E is at 16.3, and SmallCap’s is at 15.9. Both are still cheap relative to their own histories. Even the Magnificent-7’s forward P/E of 26.1 is well off its peak of last October (chart).

May 3, 2026
Yardeni ECONOMIC WEEK AHEAD: May 4-8

The week ahead is chock-full of labor market indicators. In addition, nine Talking Fed Heads on the Federal Open Mouth Committee are on the speaking circuit, with Williams, Bowman, and Goolsbee coming up twice. Despite the elevated oil prices, the stock market continues to levitate to new highs. The price of a barrel of West Texas Intermediate crude hit $110.10 intraweek and closed on Friday at $102.48. Brent crude hit as high as $120.65 during the week and closed at $108.72. The S&P 500 finished the week at another record high regardless.

The Q1 earnings reporting season is going strong. Roughly 44% of S&P 500 companies reported results last week. Big names scheduled to report this week include Palantir, AMD, McDonald’s, and Arm. The industry analysts’ consensus forecast for S&P 500 companies’ aggregate earnings growth in 2026 has climbed to 19.8%, well above the 11.7% and 13.6% figures posted in 2024 and 2025 (chart). The double-digit marathon should continue in 2027, with the analysts collectively forecasting a 17.5% gain. They certainly are in sync with our Roaring 2020s narrative!

With that said, let’s take a look at the key releases most likely to shape investors’ thinking on business activity, the state of the consumer, the labor market, and inflation this week:

(1) Employment. April’s employment report (Fri) is the headliner for the week. The unemployment rate is likely to tick down to 4.2% based on its relationship with initial unemployment claims (Thu), which have been falling in recent weeks (chart).

Jobless claims also suggest that the Challenger measure of layoffs (Thu) remained low in April (chart).

The ADP weekly employment report suggests that the monthly report (Wed) for April will show a solid increase in private industry payrolls (chart).

March JOLTS data (Tue) are unlikely to differ much from February’s results (chart). We do expect to see more job openings and hiring activity in April based on the recent decline in jobless claims and increase in ADP weekly payrolls.

…(3) Consumer credit. March consumer credit (Thu) data are likely to show a strong increase in revolving credit, based on comparable weekly data for commercial banks (chart).

…(5) NY Fed inflation expectations. The NY Fed’s Inflation Expectations release (Thu) for April is likely to show a jump in the year-ahead measure closer to 4.0%, up from 3.4% in March (chart). That should reflect higher gasoline prices.

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK said, over the weekend, AI good for jobs …

May 03, 2026
Apollo: Cheaper Booking Created More Demand for Humans

Online booking was supposed to wipe out the travel agent. It did not. Jevons paradox explains why: cheaper travel booking created more total travel demand, and some of that flowed back to human agents for complex trips, luxury travel and corporate accounts, see chart below.

Went TO The GOOGLE and fwiw, here’s what I got ….

The “For Dummies” Summary

• The Theory: Improve efficiency \(\rightarrow \) cost goes down \(\rightarrow \) demand goes up \(\rightarrow \) total use goes up.

• The Paradox: We try to save resources by being efficient, but we end up using more.

• Origin: In 1865, economist William Stanley Jevons noticed that when steam engines became more efficient at using coal, factories didn’t use less coal. Instead, they built more engines, causing coal consumption to triple. [1, 2, 3]

Terminal DOT COM for a view …

May 4, 2026 at 4:00 AM UTC
Bloomberg: Why Markets Think the US Is Winning the Blockade
Europe, on the other hand...

…The Strait of Hormuz has now been double-blockaded — by both the US and Iran — for three weeks. There’s a “ceasefire,” in terms of no longer bombing terrestrial targets, but both sides continue to use force and threats of violence against each other while ratcheting up damage.

Who exactly is winning? The most obvious case is that the standoff, by throttling supplies of oil and other vital commodities through the Strait, is building up the economic pain for the US and its allies. It takes time for oil to cross oceans and reach its destination, and for well-established inventories to deplete, but markets say the effects will be tough and lasting. Brent crude for the end of this year is at a new high, while 2027 prices are also elevated:

It’s obviously not an acceptable long-term position for the US, which is now launching a new plan to help ships through Iran’s blockade. But financial markets are behaving as though the war is over. That is a critical advantage for the US. Robin Brooks of the Brookings Institution argues strongly here that the blockade is working. He breaks down the strategy into three effects on Iran: starving it of exports, forcing it to run out of storage capacity, and capital flight. The first two take time to hurt, but he suggests capital is already fleeing…

…Constant Pain

After the pandemic, as the Federal Reserve wrestled to rein in runaway inflation, the US economy flirted with recession. But somehow, it kept soaring, largely propped up by the unprecedented spending on artificial intelligence by mega caps. But while its continuing strength is an advantage for the US in its war, the recession for lower-income earners grows ever more obvious. That fueled the affordability crisis that propelled President Donald Trump back to White House. Mentions of “recession” have collapsed since their 2022 peak, but little suggests that the “have-nots” are basking in the glory of the near-perfect wartime markets:

Trump’s tariff brinkmanship and then his military campaign in Iran have threatened to reignite inflation, with gas prices at the pump now exceeding $4 a gallon. A recent rally in consumer staples shows the growing strain as consumer confidence sinks to fresh lows.

How to make sense of this? BCA Research’s chief strategist, Felix Vezina-Poirier, notes that while markets are driven by the economy, they also drive economic life through financial conditions, wealth effects, and input prices. That wealth effect is especially important in a K-shaped economy: consumption for the upper part of the K depends on capital income and wealth effects, while the lower part depends on wages.

Consumer discretionary stocks have lagged, largely thanks to their lack of tech firepower, but they’re staging a respectable rally. It looks like the “haves” remain in the game and are spending money:

The New York Fed’s Economic Heterogeneity Indicators show retail spending driven by high-income households earning more than $125,000 per year. To quote the bank’s researchers, “reliance on a single segment of the economy has important implications for spending growth and its fragility, as well as for economic vulnerability and policy.”

How long can lower-income households hold out? The temporary boost to incomes from tax refunds is fading now that tax day has passed. Sam Tombs of Pantheon Macro sees this leaving households increasingly exposed to surging gas prices.

He estimates that oil prices would translate into a roughly 1% quarter-on-quarter, annualized decline in real after-tax income in the second quarter. At the same time, the savings rate is already low at 3.9%, so people have limited capacity to absorb this shock. Futures are pricing ever more expensive gasoline at the end of this year:

Confidence that the consumer and the broader economy can weather the energy shock rests on the assumption that oil prices don’t push up much further. Aditya Bhave of Bank of America notes that higher gas prices have already eroded nearly half of the income boost from tax refunds; to gauge the road ahead, he compares current wholesale gasoline futures with levels observed on Feb. 27, before the war, to estimate the additional burden on households:

We estimate the full-year “gas tax” to be around 0.5% of GDP. That is about equal to the boost we estimate from the One Big Beautiful Bill or AI capex. This drag could be much higher as we only focus on gasoline, and the energy shock should drive up the costs of other goods and services.

Futures may be unduly pessimistic. But if the shock is more persistent, then growth in disposable income could go negative, as the chart shows:

For now, the mega-caps’ capex is masking the disparity between the haves and have-nots.

Finally, as Uncle Scott sold USTs last week, a few visuals of the yields meeting inflation …

May 3, 2026
WolfST: The US Government sold $723 billion of Treasury Securities this Week. Inflation Jumped and Met T-bill Yields - 30-year Treasury yield looks like it’s setting up to break out past 5%. A rate cut while inflation is heating up could do it.

…The 30-year Treasury yield had gone over 5% briefly on Thursday morning following the inflation data and on Friday settled at 4.97%. It has gone over 5% several times briefly since October 2023. And the fluctuations back down have been getting smaller and smaller.

It looks like the yield wants to break out to the upside past the 5% line. A rate cut while inflation is heating up all over the place could do it. If the bond market thinks that the next Fed, under chair Warsh, will “look through” inflation and let inflation ride, on the hopes that future efficiencies from AI or whatever will knock it back down someday, it could light a fire under long-term yields.

AND presented without further comment …

… THAT is all for now. Off to the day job, (hopefully) BACK IN A WEEK…

Bloomberg: Trump Reviewing Iran’s Latest Offer But Doesn’t Rule Out Strike

Thanks. Thanks for that …

Gonna lead with a quick shout out to all those who’ve recently joined and are following along this ‘Stack … special thanks to those recommending it and appreciate as always, your TIME.

That in mind, a schedule update as Monday will be last ‘daily’ offering for the week. I’ll be largely outta pocket and not following markets. I’ll be driving down to FLA with ‘Thing 2’ who’s heading off to continue education and pursue degree in ‘golf management’.

They say if you like what you do, you’ll never work a day in your life. Sounds like he’s heading off in the right direction (and likely why I still read as much as I can ‘bout markets and follow along best of my now limited capabilities).

I’ll be spending my life savings during each and every ‘gas and go’ along the way (COSTCO earlier today $4.15/gal … ) and maybe y’all can work on reversing this trend by time I’m back…

I’ll lead with couple MONTHLY charts …

2yy MONTHLY (bars): 4.00% then 4.375% support …

… as momentum stretching up into overSOLD territory, would seem to me you’d be closer to covering shorts or preparing to BTFD and yet, you’ll see below, that’s actually NOT the case … BAML gettin’ short 2s … interesting …

10yy MONTHLY (line): 4.50% support …

… as momentum adjusting from overBOUGHT and moving towards, but not yet extremely overSOLD … the grind higher continues, perhaps a bigger #DipOrTunity to come …

Next up, a story from Friday morning … data …

ZH: Manufacturing ISM Misses As Prices Surge Most Since April 2022, Employment Slides To Worst Print Of 2026

… and some Fedspeak …

ZH: Three Fed Officials Explain Why They Dissented, Blasting Fed's "Easing Bias"

Friday afternoon. EBB one of the best out there and not only armed and dangerous with A Terminal, but has had insights how to USE the data for as long as I can remember … he’s got a way with words, too …

May 1, 2026 at 5:57 PM UTC
Bloomberg: Bond Traders Hedge for Both Cuts and Hikes After Fed Division

A rare opportunity is opening up in rates derivatives underlying the $31 trillion Treasury market: Division at the Federal Reserve has traders placing bets on interest-rate cuts next year while also hedging for a hike.

Wagers cropped up in the wake of this week’s Fed meeting targeting two quarter-point increases in the US by September 2027 and two new positions in protection for rate hikes in the coming months, as well as continuing demand for more than one reduction by March. It reveals that market participants are increasing the variety of bets in their playbooks after some US central bankers made clear this week that they see the potential for the Fed’s next move to be a hike.

“People three months ago hadn’t envisioned higher rates and given 2022, don’t want to be caught flat footed so hedge upside risk,” said John Briggs, head of US rates strategist at Natixis North America, referring to the last rate-hiking cycle when investors got hammered.

One trade in the Secured Overnight Financing Rate, or SOFR, which closely tracks pricing around policy expectations, futures market, is already starting to make money with the hawkish scenario shift. In the December 2026-March 2027 SOFR spread, volumes surged to 128,000 on Wednesday, the second biggest day’s trading. Flows included a large steepener position – targeting the March 2027 contract to underperform the December 2026 – which was placed in the lead up to the central bank policy decision. By the end of the day, the position had nearly doubled in value for an in-running profit of almost $2 million.

Meanwhile, demand remains for hedges around a couple of rate cuts by March, which was also a popular play on Thursday. Ed Al-Hussainy, portfolio manager at Columbia Threadneedle Investments, said the labor market is a potential “blind spot” that would benefit from such trades…

…The chance of a rate increase being priced for April — around six basis points — “is probably premature and the more likely path for policy for this year, is a Fed that remains on hold,” said Kevin Flanagan, head of investment strategy at WisdomTree.

“There are limits as to how high the two-year can go in that environment,” he said. US two-year Treasury yields traded around 3.88% on Friday, about seven basis points below Wednesday’s close…

… hikes AND cuts on the table … lets see what, if anything, my BondBot Intern has to say …

OIL RUNS THE DESK, BONDS JUST TAKE ORDERS

Treasuries spent the week getting yanked around by crude like a junior trader on his first Fed day. The 10Y pushed toward ~4.42%, 2s near ~3.94%, and the long bond flirting with ~4.90% as oil kept grinding higher and equities wobbled, then bounced, then shrugged. The S&P mostly traded like a levered ETF on gasoline prices—because apparently it is now. Meanwhile, Powell sticking around post-chair didn’t calm nerves; it just reminded everyone the Fed isn’t done babysitting inflation…

…Punchline: In 2026, forget the Fed—WTI is the real Chair, and it’s hiking your cost of living daily.

… not terrible. Moving on …

… I’ll move on TO some of Global Walls narratives I’m still blessed to stumble upon one way or another. These are SOME of THE VIEWS you might be able to use … This week there are bulls (MS) and bears (DB and BAML) and some in between … You’ll ALSO NOTE Jamie Dimon’s group jacking year-end 10yy tgt …

THE Bank of our land is FADING FRONT END … selling 2s, gettin’ short …

01 May 2026
BAML: Global Rates Weekly
Hold that thought

The View: Jury out til June
Next moves in global rates depend on persistence of commodity shock and upcoming labor/activity data. We favor front end hawkish trades in AU / US / EU, fade CA hikes, watch UK guidance, and expect Japan 10Y to lag with FX intervention risk.

Rates: Hawk-tucky derby: rates for the roses
US: We go short 2Y UST; upside oil risk & strong data trend > Warsh cut anchor. May refunding = UST to hold coupons, forward guidance & TGA preference in focus…

…Technicals: Seasonally, May is a mixed month for yields
Yields tended to be little changed in May. However May of US Presidential Cycle year 2 favors modestly lower US 2Y, 5Y, JGB 30Y yields, higher BTP & Spain 10Y yields.

NFP precap … never too early, right …

1 May 2026
Barclays US Economics: April employment preview: Teeter totter

We forecast flat readings for headline and private nonfarm payrolls in April, extending Q1's volatile monthly swings, alongside an unchanged unemployment rate at 4.3%. Barring revisions, this would place the 4mma of payroll gains at 51k, which we regard as the underlying pace.

Best in show … stocks vs bonds and the coiling in bonds persists — watching 4.40 and 4.25 …

May 1, 2026
BMO US Rates Weekly: Drifting into Payrolls

…We’ve been focused on the coiling price action in US rates and while the narrowing range broke out bearishly, yields have drifted back toward all too familiar levels. Our approach remains that dip-buying won’t become topical again until 10-year yields are back above 4.40% and selling strength won’t come into play until 4.25% or lower. Said differently, the range-trade remains intact for the time being, and we don’t suspect that the week ahead will result in a break in either direction in the absence of material progress toward a deal with Iran. Curve shape will be equally uninspired – at least that is our base case until there is either a significant safe-haven bid for Treasuries that breaks the 47 bp support in 2s/10s or a material rethink of the Fed that rekindles steepening pressure…

…Our second chart shows the performance of the S&P 500 and Treasuries since the beginning of the US-Iran war. Both stocks and bonds sold off during the first four weeks of the war, and by late-March, stocks were down by as much as 8% from pre-war levels and Treasuries were down by as much as 2%. Since late March, the recovery in equities has been far more dramatic than that of the Treasury market. As of today, Treasuries are still down more than 1% from pre-war levels, but the S&P 500 has more-than-reversed all of its losses since the beginning of the conflict, and is up by more than 5%. Despite the ongoing war and oil prices above $100/bbl, the major US stock indexes reached new record highs on Friday. Equity investors appear to have moved on, as it were.

The strength of the equity market has once again provided a constructive backstop for consumption expectations in light of the supportive impact for the wealth effect. Broadly speaking, financial conditions have eased since late March – a reality that tracks well with the rebound in equity prices. With stocks once again at record highs, the easing impact on financial conditions has contributed to the Fed’s ability to wait-and-see how the war impacts real consumption and overall growth. In March, the risk that substantially higher oil prices led to tighter financial conditions was a consideration that supported the doves' case for rate cuts. That argument has since lost its relevance with the S&P 500 above 7200…

Firm who remains bearish and short (10s vs 4.11, tgt 4.45) …

1 May 2026
DB: US Fixed Income Weekly

This week featured Powell’s final press conference as Fed chair, capping off an FOMC meeting where the Committee appeared to inch closer to a more neutral bias with three hawkish dissents to the easing bias of the statement. The market reacted by pricing in higher odds of a hike over the next year, though this has partially retraced since Wednesday. We note an interesting “hump” in the Fed path pricing with flies centered on SOFRH7 and SOFRM7 trading cheap relative to the rest of the strip. We continue to view near-term hikes as unlikely given the downside labor market risks and potential for an earlier resolution to the conflict in Iran. On swap spreads, we see potential for tightening going into next week’s QRA given the pattern in the last four consecutive refunding announcements but would view that as a good opportunity to initiate spread wideners. We think Treasury may adjust its statement language to soften the forward guidance on coupon auction sizes at this refunding announcement; we see nominal coupon increases beginning in February 2027…

Jamie Dimon’s shop SAYS … they’ve jacked 10yr yield f’cast for years end …

01 May 2026
JPM: U.S. Fixed Income Markets Weekly

…Governments
Given a more hawkish FOMC outcome, we now think a steeper money market curve is warranted, and raise our YE 10-year forecast from 4.35% to 4.50% to reflect this view. Next week’s refunding announcement combined with long position technicals present upside risks to yields over the near term. With uncertainty elevated over the timing and duration of the war in the Middle East and the attendant impact on energy prices, we do not recommend outright bearish duration positions: hold 2s/5s/10s belly-cheapening butterflies as a low-beta bearish position with relative value. We preview the May refunding: we expect Treasury to keep nominal coupon auction sizes unchanged, though larger financing gaps open in FY27 and beyond. We see a significant risk that Treasury may remove “at least” from its long-standing forward guidance. We review the TIC annual foreign portfolio holdings report. Initiate shorts in 2Yx3Y inflation swaps as technicals and the macro backdrop have shifted bearishly…

…Treasuries
You say goodbye, and I say hello

• This week’s dissents from regional Fed presidents raise the risk the Fed could move to a neutral bias at the June FOMC meeting. Our forecasts had assumed the OIS curve would remain inverted, but now we think a steeper money market curve is warranted: we raise our YE 10-year forecast from 4.35% to 4.50% to reflect this view

• Over the near term, next week’s refunding announcement could have a modest bearish impact on Treasury yields, and combined with long position technicals, presents nearterm risk of higher yields

• Despite this backdrop, we do not recommend outright bearish duration positions, particularly in the context of uncertainty over the timing and duration of the conflict in the Middle East and the attendant impact on energy prices. We continue to hold 2s/5s/10s belly-cheapening butterflies as a low-beta bearish position with relative value

• We expect Treasury to keep nominal coupon auction sizes unchanged on Wednesday. The current calendar leaves Treasury well-financed through FY26, though larger financing gaps open in FY27 and beyond. Thus, we see a significant risk that Treasury may remove “at least” from its long-standing forward guidance…

AND a firm who continues to LIKE bond market (and remains long) and notes stops near (long 5s and stop 4.15, for example) …

May 1, 2026
MS The US Treasury Market Needs a ↑↑↓↓←→←→BA Code | US Rates Strategy

The continued closure of the Strait of Hormuz, the threat of higher tariffs on cars and trucks from the European Union, and challenges forming consensus within the Fed make investing in and calling the US Treasury market difficult enough to warrant a Konami Code. Stay long UST/TIPS, in steepeners.

Key takeaways

• Oil, tariffs, and FOMC dissent took pricing to a no-easing-bias outcome: trough fed funds sits above the 2026 dot and 36.5bp over the longer-run, raising the hurdle.

• Treasury weakness came from the policy path, not term premium; the 10-year residual fell near pre-April 2 levels, suggesting real demand bought higher yields.

• This inflation shock is not 2021: ISM prices are high, but employment is mid-40s, so weaker growth can restrain the Fed despite energy pass-through risk.

• Our trades stay long duration: long 5-year Treasuries, long 5-year TIPS real yields, keep 7s30s steepeners and 2-year UST SOFR spread longs.

• Watch oil/Hormuz, tariffs, and March JOLTS; upside data can trigger stops before CPI swap divergence and demand destruction cap yields, keeping timing tight.

…We are nearing our trailing stops - which might get triggered by yet another round of (weather affected) March data. But we hold out hope that investors stop trading the same data over and over again, given current valuations…

#DipOrTunity …

30 April 2026
SocGEN: Fixed Income Weekly
We need to talk about growth

…United States
Far from over

The tug-of-war between the hawks and doves was on full display at the April FOMC meeting with three hawkish dissents from the regional Fed presidents and a well-anticipated dovish dissent from governor Miran in favour of a cut. Powell will stay as Fed governor even after his term as Chair ends in mid-May as he waits for the DoJ investigation to be “truly over, with transparency and finality”. The exuberance over the ceasefire agreement and a potential off-ramp toward the end of Iran war seems to be unravelling as the blockade continues with no clear signs of an end to the conflict. Global bond yields rose sharply alongside the rally in oil prices, reaching new year-to-date highs. With the 2yT, 10yT and 30yT yields approaching key thresholds of 4%, 4.5% and 5% respectively, the key question is whether the sell-off continues or whether these attractive yield levels are a buying opportunity for bond investors. The price action in the bond markets and investor sentiment continue to favour the latter as the bias remains towards a resolution to the conflict leading to a decline in oil prices and bond yields.

Notwithstanding the hawkish dissents the bar remains high for the Fed to hike rates. The fiscal stimulus, strong growth momentum, and resilient labour market continue to support consumer spending despite higher oil prices and sticky inflation. In this context we do not expect a durable paradigm shift toward much higher yields from here and believe that investors should consider legging into long positions in bonds either outright or conditionally at the upper end of the range. With the front end pegged we expect the UST 2s5s and 2s10s curves to retain a flattening bias, and the belly to remain attractive.

We expect the Treasury to retain its forward guidance and keep coupon issuance sizes stable over the upcoming quarters, although a lot could change given uncertainty around tariffs and the potential for an increase in defence spending in FY 2027. The current proposal calls for an increase in the defence budget to $1.5tn which could result in a sharp increase in discretionary spending without meaningful offsets. In addition to higher inflation, the deteriorating fiscal outlook is also contributing to the pressure on global bond yields.

Recommendations
…Despite hawkish dissent, the bar remains high for the Fed to raise rates. We expect the Fed to stay on hold with a bias toward eventually easing. Accordingly, we view any meaningful sell-off in the front end (2yT or 1y1y OIS) as an opportunity to initiate or add to long positions.

…10y Treasury yield: approaching interim hurdle at 4.48%
0y Treasury yield recently broke above the upper boundary of a short‑term descending channel resulting continuation of the up move. It is gradually inching towards the March peak at 4.48%, which remains an interim hurdle. A break above the March high at 4.48% would be crucial to confirm a larger uptrend. If a short-term pullback develops, the 200‑DMA around 4.22%/4.19% would be a key support zone.

➔ With the 2yT, 10yT and 30yT yields approaching key thresholds of 4%, 4.5% and 5% respectively, the key question is whether the sell-off continues or whether these attractive yield levels are a buying opportunity for bond investors. The price action in the bond markets and investor sentiment continue to favour the latter as the bias remains towards a resolution to the conflict leading to a decline in oil prices and bond yields.

➔ Notwithstanding the hawkish dissents the bar remains high for the Fed to hike rates. The fiscal stimulus, strong growth momentum, and resilient labour market continue to support consumer spending despite higher oil prices and sticky inflation. In this context we do not expect a durable paradigm shift toward much higher yields from here and believe that investors should consider legging into long positions in bonds either outright or conditionally at the upper end of the range. With the front end pegged we expect the UST 2s5s and 2s10s curves to retain a flattening bias, and the belly to remain attractive…

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do …

Terminal DOT COM ahead of NFP …

May 2, 2026 at 4:00 PM EDT
Bloomberg: US Jobs Report to Show Resilience in the Wake of Iran War

(Bloomberg) -- The energy shock from the Iran war may be casting a shadow over the outlook for the US economy, but the labor market is yet to register any signs of it.

May 2, 2026 at 4:08 PM EDT
Bloomberg: Jerome Powell’s Fed years were an everything rally: Chart of the Day

…Powell’s eight years as Fed chair included COVID, the worst inflation shock in 40 years, the sharpest rate-hike cycle in decades, a regional banking scare, and repeated political pressure on the central bank.

Markets still delivered gains across almost every major asset class.

Powell spent much of his tenure as chair trying to prove he had the inflation-fighting credibility of former Fed Chair Paul Volcker, who is remembered for crushing the inflation of the late 1970s and early 1980s. The twist is that investors got the rally too…

Positions … are more short (and more so out the curve) …

2 MAY 2026
Hedgopia CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned

…10-year note: Currently net short 839.2k, up 48.2k.

…30-year bond: Currently net short 113.7k, up 29.9k.

Brent tells a trading story — and a good one, indeed …

May 1, 2026
SPECTRA friday speedrun: A quick story and more

…Interest Rates

The ECB is set to hike in June and most of the central banks look like they are priced reasonably. The Fed has nothing priced in for the next year, which also makes sense because they probably should be hiking but that side of the distribution is still truncated for now. We will see how Warsh tries to steer the committee. To me, he’s a continuation of the orthodox, mainstream policy approach that Powell followed and while it’s fun to talk about balance sheet reduction, it’s also fun to talk about deficit reduction. Neither are happening.

U.S. yields are remarkably stable.

… AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.

First is a LINK thru to BMOs calendar …

… then there’s Wells FARGOs version …

…Employment • Friday
he labor market is still stuck in the low fire, low hire dynamic that has prevailed for the past two years. While layoffs at well-known tech companies made headlines in recent weeks, initial jobless claims, WARN notices and Challenger job cut announcements point to economy-wide layoffs remaining tame for now. Yet, firms still show little appetite to hire additional workers. Small business hiring plans are sitting at a two-year low, regional Fed employment PMIs sank further into negative territory in April and Indeed job postings—which had been on an upswing since the start of the year—wobbled in March.

With demand for workers little changed, the supply of workers has become a bigger factor in the pace of job growth. Last month’s 178K rise in payrolls, even accounting for the ~30K boost from completed strikes, is untenable given the immigration and demographic constraints on labor force growth. We expect some payback in April and estimate total payrolls advanced 70K, with private payrolls up 75K.

The April unemployment rate is also like to point to a slightly softer jobs market. Last month's drop to nearly 4.2% (4.26% unrounded) was driven by a swath of unemployed workers leaving the labor force. We look for a rebound in the labor force and ranks of the unemployed in April to push the unemployment rate back to 4.4%. That would leave the unemployment a tick higher than what most FOMC members estimate is full employment—uncomfortable amid an uncertain demand backdrop, but not indicative of the labor market's delicate balance tipping in April…

… and lets NOT forget EconOday links (among the best available and most useful IMO), GLOBALLY HERE and as far as US domestically (only) HERE …

A couple visuals as this weekends note comes to close … first, ahead of NFP …

… and couldn’t resist the puppy picture …

… THAT is all for now. Enjoy whatever is left of YOUR weekend …

Equity futures are MIXED, yields UNCH as EARL GRINDS …

CNBC: Oil rises as White House says Iran ceasefire halts 60-day war deadline

… AND a few thoughts …

RATES are relatively unchanged and global markets calm, largely due to the fact that most of the EZ is out on (May Day) holiday. Who am I to interrupt or disturb the peace?

Things ‘bout to get hectic here on my side and I’ll apologize ahead of time as i’ll be traveling most of next week and hope to be back IN seat, fully back up to spammation speed by Monday.

Given EARL remains the single largest input and trumped data yesterday (BMO quote cited above, link / note below), I’ll not linger too much longer here / now.

Listened to great interview with Barclays stock jockey / strategist talking about how he doesn’t like much of anything and when asked where he’d hide, initially said the MAG6 (TSLA hater … hey, haters gonna hate) and pressed further, he thought about front-end of the curve.

Liking 2s as the Fed unlikely to HIKE and taking some solace, finding some value, seems like a fair place to begin …

2yy DAILY (bars): 4.00% support …

… momentum already turned (bullish) and we never quite got up TO perfect #DipOrTunity levels. Markets never do … #Got2s?

… and end. I 100% get it and agree Fed unlikely to HIKE. I’d also say that the reasons to CUT aren’t so obvious but best I reckon, laws of (economic)gravity have not been repealed and am NOT lookin’ forward to this weekends trip to fill up the fleet at local COSTCO gas stations…

Stocks UP helping ‘ease’ financial conditions.

EARL UP working against that ‘easing’ of the burden.

QUESTION remains to be seen is IF EARL will do the Fed’s ‘hike’ for it and at the same time, IF stocks movin’ and groovin’ will work to provide the ‘ease’ others are hoping for.

Again, to think RATES matter more than all this, the data, and the Persian Excursion (and so, EARL) would NOT be the days hot take.

Watching as the new day and month takes shape / form and with a quick look back at yesterday, well … DATA? Mixed or not good. OR … GREAT …

ZH: Core PCE Rises Most In 3 Years; Savings Rate Tumbles As Spending Far Outpaces Income

ZH: "Low Hire, No Fire": Jobless Claims Unexpectedly Plunge To Record Low

ZH: GDP Shocker: 75% Of US Growth In The First Quarter Was Due To AI

WolfST: Inflation in the Entire US economy Is Rocking and Rolling, and It’s Not Just Energy - The 6-month core services PCE inflation index, accelerating since August, hit 3.7% annualized. Chip prices and software wreak havoc amid consumer electronics.

WolfST: Without Government Spending & Trade, GDP Rose by 2.5% in Q1, Boosted by AI Investments. Debt-to-GDP Ticks up to 122.6% - Consumer Spending Was OK-ish. Federal government spending spiked back partially after collapsing during the shutdown. Trade worsened.

… I’ll turn rest over TO The BondBeat Intern and move right along …

May Day, Mayhem Lite: Bonds Blink, Oil Barks, Europe Sleeps In

Treasuries caught a bid after 4pm as oil’s Thursday moonshot faded—30yr back under ~5%, 10yr ~4.38%, 2yr slipping toward ~3.9%—because nothing calms inflation panic like crude backing off triple-digit cosplay . Equities held up (barely), with Europe closed for May Day—so much for a synchronized “sell in May” kickoff. Oil still north of $110 keeps gas prices grinding higher and consumers grumbling…

… an OK writeup, not it’s best BUT likely more a reflection on the prompt(er) …

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 705a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 01 May, 2026

• PiQ Overnight News Roundup: May 01, 2026

• NEWSQUAWK US Market Open: JPY breaches Thursday low in potential further intervention, bourses in thin trade amid holiday, US futures lacklustre … Fixed income futures are contained in limited conditions, with US data ahead … USTs in a narrow 110-17+ to 110-22+ range, awaiting Final Manufacturing PMI and then the ISM Manufacturing figure thereafter. Today’s docket also has Fed’s Miran; reminder, as Powell has indicated he will remain at the Fed once he is no longer Chair, Miran will likely vacate his spot for Warsh.

• Yield Hunting Daily Note | April 30, 2026 | PSUS IPO Analysis, Nuveen Muni Merger (Again!)

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use …

JPOWS DOT says …

30 April 2026
ABN AMRO: FOMC Watch - The dots move up, and Powell will be one of them

The Fed left rates unchanged as expected. The major headline was that four FOMC members dissented, a number not seen since the early 1990s. This made the final Powell FOMC meeting his most divided, and gives an interesting starting point for his successor, who was already expected to have some trouble building consensus behind him.

AND a large British operation data recapping …

30 April 2026
Barclays US Economics: March consumer spending still resilient

Real consumer spending held up in March, growing 0.2% m/m, led by goods consumption. Income fundamentals still appear resilient, but we expect them to provide less support to consumer spending in the coming months. With spending once again outpacing income, the saving rate declined to 3.6%.

30 April 2026
Barclays US Economics: Q1 GDP: Resilient private demand persists

The BEA's advance release showed a 2.0% q/q saar real GDP increase in Q1 following Q4's soft 0.5% q/q saar, with the swing reflecting distortions from last year's government shutdown. Although headlines look soft, private domestic demand was resilient in Q1, with PDFP rising a solid 2.5% q/q saar.

There’s an idea out there perhaps data didn’t / doesn’t matter as much the price of EARL …

April 30, 2026
BMO Close: Oil, not Data

…Thursday’s session demonstrated that moves in US rates continue to be almost entirely a function of oil prices. After briefly breaching $110/bbl, the front-month WTI crude oil contract spent much of the session in negative territory. As a result, there was a persistent bid for Treasuries that brought 10-year yields back below 4.40% and 2s under 3.90%. Frankly, we were somewhat surprised that the post-FOMC selloff wasn’t extended further in light of the Committee’s debate over forward guidance and the hawkish implications from Powell retaining his Board seat for the time being. We maintain that regardless of how long Powell remains on the FOMC, the direction of policy rates will ultimately be a function of the performance of the real economy throughout the coming period of ‘very high uncertainty’. Partially for this reason, today’s bullish price action was all the more notable given the strong economic data and higher-thanexpected quarterly core-PCE…

…Month-end buying must also be considered when assessing Thursday’s price action and the fact that the data apparently only mattered for a brief moment. Friday’s session will illustrate the degree to which it was, in fact, simply a fleeting impact as opposed to an easing of energy prices. As has recently been the case, the overnight session is once again in focus as we look to gauge the extent of follow-through from the move. Overseas investors were willing to provide a stabilizing bid for the Treasury market once 10-year yields breached 4.40% and we anticipate that dipbuying interest will once again mobilize as the weekend approaches. The one lingering concern is that the event risk over the weekend from the Middle East is elevated given Trump’s comments from earlier this week…

… and this idea isn’t new to any of us, right? Moving on … a few words from a large German bank stratEgerist (as well as monthly recap) …

1 May 2026
DB: Early Morning Reid

…Oil prices have continued to creep higher overnight, with no sign that the US and Iran are moving closer to a deal. Given the month-end, there’s been a contract roll, but if we stick with the July 2026 contract for consistency, Brent crude is up +1.07% this morning to $111.58/bbl. Moreover, Trump showed no sign of backing down, saying “Their economy is crashing, the blockade is incredible”, and “we’ll see how long they hold out.” Meanwhile, there’s been no sign of comprise from the Iranian side, with new Supreme Leader Mojtaba Khamenei issuing a statement that Iran would maintain its missile and nuclear capabilities, and suggesting that Iran would implement “new legal frameworks” over the Strait of Hormuz…

…Otherwise overnight, the risk-on tone has generally continued as May begins, although many indices are closed for a holiday. However, those that are open have generally risen, with the Nikkei (+0.60%) and Australia’s S&P/ASX 200 (+0.98%) both higher this morning, whilst futures on the S&P 500 (+0.23%) are pointing to further gains as well…

…Markets also ended April on a stronger note yesterday, as a sharp intraday pullback for oil helped to ease fears about stagflation. In fact, Brent crude fell from an intraday high for this conflict of $126.41/bbl, all the way down to $114.01/bbl by the close. These moves may have been distorted by the impending end-of-month benchmark shift, but even for WTI we saw prices rise to a post-ceasefire high of $110.93/bbl intra-day before easing to $105.07/bbl by the close (-1.69% on the day). So relative to 24 hours ago, concerns about inflation have eased considerably, with markets pricing in a slightly more dovish path for central banks as well.

Those oil moves came as central banks sounded less hawkish in their decisions than many feared yesterday, which led to a decent sovereign bond rally on both sides of the Atlantic. For instance, the ECB held rates as expected, keeping their deposit rate at 2%. President Lagarde did give several hints towards a June hike, saying “directionally, I know where we are heading” and acknowledging that rate hikes had been discussed yesterday. But she also offered some dovish counterarguments and didn’t paint a June hike as a fully done deal. This led markets to dial back their expectations for imminent tightening, with the number of hikes priced by year-end falling -10.6bps to 73bps. Our European economists’ main takeaway is that the data and events now need to disprove the case for a hike in June, but they see this leading to a “measured” tightening cycle rather than a “forceful or persistent” one. See their full reaction here…

…However yesterday was a day of relief and Treasury yields also fell back, with the 2yr yield (-7.8bps) falling to 3.87%, whilst the 10yr yield (-5.9bps) fell to 4.37%. In large part that was helped by easing concerns around inflation as oil prices fell back. But we also saw Fed pricing shift in a slightly dovish direction as well, with futures for the December meeting going from 3bps of hikes on Wednesday to 3bps of cuts by yesterday’s close…

01 May 2026
DB Early Morning Reid - April 2026 Performance Review

April was another eventful month as the Iran conflict showed no sign of easing. Oil prices saw large ranges but ultimately remained elevated, with Brent crude briefly moving above $120/bbl intraday for the first time since 2022. And in turn, that raised fears about a stagflationary shock, with sovereign bond yields hitting multi-year highs in many countries. In fact, April saw Japan’s 10yr yield hit its highest since 1997, the UK’s 10yr yield hit the highest since 2008, and Germany’s 10yr yield hit its highest since 2011. But equities recovered rapidly after a poor performance in March. In fact, the S&P 500 was up +10.5% in total return terms, marking its best monthly performance since November 2020 when the vaccine news was released, whilst the Philly semiconductor index (+38.4%) had its best performance since February 2000, the month before the dot com bubble began to burst. That wasn’t just confined to the US however, as the MSCI EM Index (+14.7%) also saw its best month since November 2022.

Month in Review - The high-level macro overview
…With oil prices moving higher, that also led to mounting inflation fears. For instance, the US 1yr inflation swap ended the month up +22bps at 3.42%…

…All that meant sovereign bonds struggled in April, with yields at new highs in several countries. In Japan, the 10yr yield moved above 2.5% for the first time since 1997, whilst April 29 saw Germany’s 10yr bund yield hit a post-2011 high of 3.11%, and the UK’s 10yr gilt yield reach a post-2008 high of 5.07%. In the US, we didn’t see similar records, but the 10yr Treasury yield still rose +5.4bps in April to 4.37%…

…Which assets saw the biggest losses in April?
US Treasuries: Inflation fears and the prospect of fewer rate cuts meant US Treasuries struggled in April. They were down -0.1% in total return terms, and the 10yr yield was up +5.4bps to 4.37%…

It’s all MAD, I tell you. MADNESS …

30 April 2026
ING Rates Spark: A cacophony of mad stuff

Thursday was a mad day, with many markets just doing their own thing. The war 'over there' seemed like a sideshow, of little importance for risk assets at least. And bond yields fell even as inflation breakevens continued to rise. The price of oil even fell, on zero war progress. All a bit disorderly, as central banks talk risks but hold pat

30 April 2026
ING: US growth driven by tech investment in first quarter

Amid some cooling in consumer spending, investment linked to tech and AI has clearly become the main engine of growth in the US. Durable goods orders suggest this trend will continue through much of this year, but there are concerns that there is a lack of breadth to the overall US growth story

EARL and (INFLATION) markets (staying long TIPS with trailing stop)

May 1, 2026
MS US Rates Strategy: Oil and Inflation Markets II

Higher gasoline futures are lifting CPI swaps across the curve as the conflict reaches the 60-day mark. Inflation markets are pricing an "energy pass-through to core" risk premium as 1 year core CPI fixings and inflation forwards curve move higher. We would fade this premium and maintain long 5y TIPS.

Key takeaways

• Gasoline futures have outperformed Brent, lifting CPI swaps; US natural gas has stayed well behaved versus Europe, while core CPI fixings have repriced higher.

• Beyond the front end, 2yr, 3yr and 5yr CPI swaps now look rich versus their historical beta to 1y CPI, suggesting oil persistence risk premium is priced in.

• Beta-weighted breakevens appear rich. If rates volatility rises, 10y beta-breakevens could mean revert lower, and look attractive on an energy-hedged basis.

• Core pass-through should be limited, but risks have grown. A longer Hormuz closure, freight costs, airfares, petrochemicals and a tariff pivot add upside risk.

• 5 year real yields trend lower even as Fed policy terminal rate moves higher. We maintain long 5 year TIPS as higher inflation improves TIPS carry.

Exhibit 2: 2 year CPI swap following gasoline futures

Irananian economy crashin’ …

01 May 2026
UBS: Crashing economies

US President Trump vowed to keep the (US) Hormuz blockade, declaring the Iranian economy was “crashing,” which would force negotiations. Investors are more inclined to look at the state of the US economy as determining how the situation evolves. In the Wile E Coyote scenario, the US is off the edge of the cliff but happily running on thin air. Thursday’s data showed household savings rates have fallen from 5.1% to 3.6% of disposable income during this administration, which is how consumers afford the affordability crisis. This decline can sustain consumption for some time, but not indefinitely.

US market determined prices (excluding energy) rose notably in March. Some of this is lingering tariff effects, and energy still affects core inflation—airfares are partly energy costs, but are included in core measures. Nonetheless, market forces producing higher inflation will give ammunition to Fed hawks.

AND finally … all. Is. Well …

Apr 30, 2026
Yardeni: The Roaring 2020s Express Train

Why is the stock market continuing to make new highs? It's doing so because corporate earnings are doing the same, as the economy continues to speed along without stopping for a recession. The latest batch of data certainly drove the stock market higher today, confirming that we are still riding the rails on the Roaring 2020s Express. Nothing seems to stop or derail this train…

…Our homemade real GDP growth model suggests that the pace of economic activity picked up in March and April, along with the growth rate of S&P 500 forward earnings (chart).

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, some less than optimal news which isn’t news as you, like me, fill up ‘the fleet’ weekly at yer local COSTCO …

April 30,2026
AAA: Oil Prices Spike, National Average Up Nearly 30 Cents in One Week

WASHINGTON, DC (April 30, 2026) – After ticking down for nearly two weeks, gas prices are going back up again with the national average seeing a 27-cent hike in one week. The national average is $1.12 higher than it was this time last year, as oil prices surge above $100/barrel with no indication of when the Strait of Hormuz will reopen. Gas prices are the highest they’ve been in four years, since late July 2022.

Better than average money supply update literally from THE BEACH …

Wednesday, April 29, 2026
Calafia BEACH Pundit
M2 update: still looking like inflation will remain low

…Chart #2 shows the 6-mo. annualized change in M2. Currently at 4.7%, it is still comfortably below 6% and shows no signs of any worrisome uptick. The Fed lost control of M2 from 2020 through 2021, but it has been back in control for the past several years.

Chart #3 illustrates what I call “money demand.” It is the ratio of M2 to nominal GDP, and can be thought of as the amount of risk-free money and money equivalents that the average person or corporation wishes to hold, expressed as a percentage of annual income. Here we see that money demand is almost all the way back to its pre-Covid level. A powerful increase in money demand drove the ratio higher from 2020 to 2021, and an equally powerful decline in money demand (which in turn has been driven by a decline in risk aversion) has driven the decline in the ratio since 2022. Money demand appears to be stabilizing at a time that money supply is growing at a relatively slow pace. This argues strongly for there being an absence of any monetary source of rising inflation. Higher oil prices are certainly driving energy-related prices higher, but this is not symptomatic of an untoward rise in the general price level. I suspect that the longer oil prices remain elevated, the more stories we will hear of price declines in other areas of the economy. The economy’s monetary “budget” does not allow for an overall increase in prices beyond what we have been seeing in recent years.

AND … that time of year to punch holes in the old mkt addage — sell in May and …

May 1, 2026
The Daily Number: Sell in May Starts Now

We are entering May, the 5th month of the year, and the start of the market’s weakest period, which tends to run through the middle of the year.

Here’s the chart:

…The Takeaway: This is the part of the year where trading conditions tend to get tougher…

As we move into this stretch of weakness, the market often shifts out of the year’s strongest period and into a weaker environment.

On average, returns slow down through this period. The market still moves, but it does not deliver the same progress or consistency as it did in the first part of the year.

So, if we start to see weakness, this is how it will show up in the market: momentum will start to fade, moves won’t stick as well, and price will spend more time going sideways than trending higher.

Moves in market leaders will still happen, but they will be less clean.

All of this lines up with where the mid-term cycle tends to soften. It is not about one month, it is the whole middle stretch where conditions are not as strong.

During this period, the focus here is to keep things simple. Expect fewer opportunities, demand better setups, and stop holding on to trades that are no longer working.

From here, the market tends to run into a headwind, so trade accordingly and follow the data.

4/30/26
FIRST TRUST: Sell In May and Go Away?

…View from the Observation Deck
The old axiom in the stock market about selling your stocks at the close of April and buying them back at the start of November used to make some sense from a seasonality standpoint. Back when the U.S. was more of an industrialized economy, it was common for plants and factories to close for a month or longer in the summer. This downtime allowed businesses to retool and gave employees time to vacation. The “Sell In May” theory was that companies would conduct less commerce in that six-month span, which would likely translate into lower earnings, and temporarily reduced stock prices. In our view, the U.S. economy has become so technologically advanced and globally competitive that companies can no longer afford these extended periods of stagnation.

• From 2006 through 2025, there were just three instances (2008, 2011 & 2022) in which the S&P 500 Index posted a negative total return from May through October.

• The average total return for the S&P 500 Index for the May-October periods in the table was 4.84%.

• Seventeen of the twenty top-performing sectors in the table posted total returns in excess of 10.00% and eight of them returned at least 20.00% (May-October).

…Takeaway
We publish today’s table on an annual basis as a reminder to investors that not all market maxims should be taken at face value. In this case, the data presented does not support the notion that investors should “sell in May and go away”. Over the last 20 years, an investor who remained fully invested in the S&P 500 Index from May through October enjoyed an average annual total return of 4.84% during those months alone, a significant figure when compounded. We continue to advocate that investors consider their time horizons and take risk as appropriate.

Good news … Its MAY …

Last Updated: April 30, 2026
LPL: Sell in May and Go Away? Maybe Not

The sharp rebound from the March lows has pushed most major equity indexes back to record highs. This upside momentum has been fueled in part by signs of de-escalation with Iran and growing expectations that the Strait of Hormuz could reopen soon. While the geopolitical environment remains fluid on a day-to-day basis, markets appear to be assigning a higher probability to a relatively near-term U.S. exit from the Middle East, alongside a normalization in global supply chains that could ultimately pressure oil prices lower.

Heading into month-end, the S&P 500 is up 9.2% as of April 29, putting it on pace for its strongest April performance since 2020. Support for equities has also come from solid first-quarter earnings and economic data that have shown limited signs of deterioration.

However, not all markets are sending the same signal. The physical oil market continues to reflect the risk of a “higher-for-longer” regime, suggesting tighter underlying supply conditions (a theme we explored further in Paper vs. Physical: What Tighter Oil Supplies Could Mean). The fixed income market also paints a similar story of lingering inflation risk as Treasury yields remain uncomfortably high. Although it’s important to note, yields have been less responsive to higher oil prices this month versus last month…

…May–October Returns Tend To Be Underwhelming but Positive

…Summary
Seasonal patterns can offer useful historical perspective, but they aren’t always a reliable guide for what lies ahead. Market direction will depend more on current forces, particularly geopolitical developments and oil prices, along with key fundamentals such as earnings, economic growth, inflation, the labor market, and monetary policy. An easing of tensions in the Middle East and a pullback in oil prices could provide ongoing support for equities, especially if earnings remain resilient.

CURVES are fun … they flatten and steepen … this next note shows how they did both and why it matters … Specifically, as I’ve mentioned before, 3m10yr — the FINANCIAL curve — matters …

Apr 30, 2026
SurplusProductivity: 2yr/30yr Flattened, 3mo/10yr Widened
Here’s why that’s important

• Dissension ranks above all else

• Treasury curves react accordingly

• Inflation expectations remain anchored

The results of the conclusion of the latest FOMC meeting were light on details. As we pointed out yesterday, the meeting produced truly something next to nothing but different from the meeting before. Rates were held, unchanged, with policymakers again deferring to wait for incoming data and events. Most notably, though, was the fact that four of the members dissented with the consensus bias; a feat not matched since 1992. Summarizing that point was, ironically, the Fed’s bias itself:

“Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Philip N. Jefferson; Anna Paulson; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting; and Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.” - FOMC accompanying bias

However, much more important were the reactions of the U.S. Treasury yield curves which saw the 2yr/30yr flatten by 5 basis points while the 3mo/10yr widened out by 6 basis points. Here’s not only why that happened, but more importantly what it means for the U.S. economy and the markets that measure it.

The U.S. Treasury yield curves had very opposite reactions to the Fed’s latest policy meeting.

It is important to make a distinction between the two very different U.S. Treasury yield curves to keep track of. Unfortunately, market analysts and economists alike have become a bit lazy when reporting on this significant market and economic indicator by relying on a shortcut variation of the dynamic known as the 2yr/10yr U.S. Treasury yield curve. Telling the halves of two different stories, this curve grossly under-serves those who imagine that it contains all the insights necessary to make inferences of the markets and the economy that they serve. Newsflash: It doesn’t. Instead, as days like yesterday clearly indicate, it pays to watch the 2yr/30yr and the 3mo/10yr…

Finally, preparing for the 4th of July and on the day the KING came to DC and was cheered on by all those in DC supporting the NO KINGS movement, one of the kiddos came down wearin’ this …

… sorry. not sorry. GREAT shirt, IMO …

… THAT is all for now. Off to the day job…

Equity futures are UP, bond yields are down as blesses both

Bloomberg: US and Iran Stuck in Standoff as Oil Prices Soar to Wartime High

… AND a few thoughts …

Rates popped on combination of EARL bid and FOMC and looks to me like there’s something happenin’ here …

30yy DAILY (bars): 5.00%

… as momentum stretched into oversold territory and appears to be rolling over. Perhaps we’re witnessing a (the) #DipOrTunity folks were looking for … interesting timing, too, as month end today arrives at 4p … #GotBONDS?

… and what it is ain’t exactly clear …

ZH: Powell's Final FOMC Sees Most Dissents In 34 Years As Fed Keeps Rate Unch (As Expected)

ZH: Wall Street Reacts To Powell's Last FOMC Meeting

…THAT was a memorable FOMC meeting … You’ll see much more heady explanations of the Fed and markets reflex below but …

Everyone, everywhere this morning wondering / HOPING i’ll utter the same words sooner rather than later …

“Thanks very much everyone, I won’t see you next time.”

…I’ve got good news and bad news on that front. Will post a more robust schedule update over the weekend but major life / household changes here will have me road-tripping down to FLA and back next week so I’m likely to be outta pocket after Monday morning HOPING to be back to full spammation the following week.

For now, though, and more generally speaking, as I heard JPOW say he wasn’t leaving — I also translated that into common sense, having the full support of the Fed in lawsuits, if needed … NOT because he can’t find work. Believe me, he’ll hit the speaking circuit and ‘write the book’ — Jay will be fine … I’m more worried ‘bout ME and at moment, I’m not f’ing leaving … like Jay … Said another way …

… Now in as far as other inputs behind push higher in yields …

ZH: Core Durables Goods Surge For 12th Straight Month, Push Bond Yield Higher

… I’ll quit while I’m behind and pass along few words from my BondBot Intern

Powell Drops the Mic, Bonds Pick It Up

…Final word: The Fed may be done hiking—but the bond market clearly didn’t get the memo.

… ok, not great, it’ll have to do.

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 705a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 30 April, 2026

• PiQ Overnight News Roundup: Apr 30, 2026

• NEWSQUAWK US Market Open: USD/JPY pressured after Katayama/Mimura verbal intervention, NQ outperforms after tech earnings … Overall, a contained session for fixed benchmarks. USTs lifted off overnight 110-07+ lows across the European morning, up to an 110-15+ high but with gains of just a few ticks at most. Action that comes as the space eases off the hawkish lows delivered after the Fed and Powell (recap on the board) … Ahead, the US is focused on PCE, consensus chimes with the guidance from Chair Powell last night. Recent pricing data has shown that energy was the primary driver, with the core offering some relative relief as such. Though, PCE-related PPI components suggest service pressures remain sticky. Policy implications would be in line with the direction of the series, though a cooler print would likely provide only temporary relief given the clear signs of persistent price pressures elsewhere.

• Reuters Morning Bid: Oil fear shrouds tech splurge

…Iran war stasis brings US inflation expectations back to the boil

U.S. headline and core inflation are heading back above 3% once more, and inflation expectations for the year ahead are building a head of steam. The only crumb of comfort for the Federal Reserve is that long-dated price rise expectations are better behaved - but even these have been irked by ‌the Iran-war-related oil shock.

A relatively short energy market hiatus can be taken on the chin by most central banks for a while, but their big worry is that a protracted crude outage feeds the expectations of wage bargainers and price setters over time and embeds above-target inflation for longer.

• Yield Hunting Daily Note | April 29, 2026 | PSUS IPO, FSSL Looks Good, IGI/ EMO

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use … Many more FOMC recaps / victory laps than all other things but there ARE other things and so …

The bank of our land with month end flows to knows …

27 April 2026
BAML: US Rates Watch
Private pension fund rebalancing update

Rough estimate for direction of rebalancing needs
…With the S&P total return in the month to date c.+9.9%, the 10-year+ UST index c.+0.5%, and corporate bonds c.+1.0% over the same period, the expectation is for rebalancing flows out of equities and into FI…

A large British shop weighs in on hawk formations …

29 April 2026
Barclays Federal Reserve Commentary: April FOMC: Hawks break formation

The FOMC held rates and issued a more-dovish-than-expected statement by keeping an easing bias, leading to four dissents. Powell was more hawkish, as expected, and said he is staying as a governor, for now. Our baseline call maintains a 25bp cut in September and another one in March 2027.

…We see risks to our baseline view as skewed toward higher inflation and delayed rate cuts, and expect the FOMC's reaction function to be little changed under a Warsh Fed…

29 April 2026
Barclays US Economics: March estimates reinforce resilience ahead of FOMC

In advance of today's FOMC announcement, March estimates of housing starts, durable goods orders, and international goods trade were released this morning. They reinforce that US spending was strong in the first month of the Iran conflict, led by robust AI-related investment and restocking.

BEST in show …

April 29, 2026
BMO FOMC: Three Dissents against statement ‘easing bias’

Dissents were the real story of the FOMC statement -- the vote was 8-4. Miran voted in favor a 1/4 percentage point cut. 3 of the dissents "did not support inclusion of an easing bias in the statement at this time..." -- Hammack, Kashkari, and Logan. The relevant language is "In considering the extent and timing of additional adjustments to the target range" -- not clearly biased toward easing, but it has been interpreted as such in the past. On inflation: "is elevated in part reflecting the recent increase in global energy prices." Uncertainty was also in focus with the new language "Developments in the Middle East are contributing to a high level of uncertainty..." The bear-flattening has extended on the statement with 2-year yields up more than 10 bp on the day as the market awaits Powell's presser…

April 29, 2026
BMO Close: The Wait Goes On

…The FOMC delivered on its well-messaged plan of leaving policy rates unchanged in the endeavor to gauge the extent of economic fallout from the energy shock. As the market continues to digest the press conference and the implications from Powell’s comments, we suspect that attention will once again refocus on the Strait of Hormuz and the ramifications for the energy sector…

…Treasuries sold off in line with the bid for energy as forward inflation concerns have once again accelerated due to developments in the Middle East…the move has brought 10-year yields back above 4.40%, which is a level that we suspect will remain relevant in the coming days. 4.40% was breached ahead of the FOMC and as oil prices rise and Trump’s messaging on Iran intensifies, we’re unwilling to fade the selling pressure.

Here we go again … reported overnight, more strikes to convince Iran to come back to the negotiating table … A large German bank describes it along with some thoughts on the FOMC meeting …

30 April 2026
DB: Early Morning Reid

…The main catalyst for the latest jump in oil prices was a report from Axios, suggesting that an escalation in the conflict was still being considered as an option. And overnight, they’ve reported that Trump is set to receive a briefing today on potential plans for military action. According to that article, US Central Command had prepared a “short and powerful” wave of strikes that would aim to break the negotiating deadlock. Moreover, that followed a post from Trump earlier in the day, which said that “Iran can’t get their act together. They don’t know how to sign a nonnuclear deal. They better get smart soon!” …

…All that follows an eventful decision from the Fed yesterday. They kept rates on hold as expected, but there were notably 4 dissents, which is the most for an FOMC decision since 1992. That included Governor Miran, who supported a 25bp rate cut once again. But we also saw three of the regional Fed Presidents – Hammack, Kashkari and Logan – make a hawkish dissent over the inclusion of an easing bias in the statement. In the subsequent press conference, Chair Powell acknowledged a “vigorous” debate about the guidance language, commenting that the centre of the FOMC was also “moving toward a more neutral place” but that “a majority of us didn’t feel like we needed to send a signal on that right now”. He also said that the“policy stance is in a good place for us to hold” amid the uncertainty stemming from the Middle East, and our US economists write that it reinforces their baseline view that the policy rate is likely to remain unchanged this year. See their full reaction note here.

Aside from policy, the other big news was that Chair Powell will stay on as a Fed Governor once his four-year term as Chair ends on May 15. As a reminder, Fed Governors have a 14-year term separate to the 4-year term as Chair, and Powell’s 14-year seat on the board goes up to January 2028, so he’d retain a vote on policy if he stays. Powell said this would be “for a period of time, to be determined”, and that he wouldn’t leave the board until the DoJ’s investigation “is well and truly over, with transparency and finality”. That decision means that the incoming chair would need to take over Governor Miran’s board seat, who voted for a 25bp cut at this meeting. There was also an update on the next chair yesterday, as the Senate Banking Committee voted to advance Kevin Warsh’s nomination to the full Senate, leaving him on track to take over as Chair next month when Powell’s term expires…

29 April 2026
DB Fed Notes - April FOMC Recap: Powell’s hike drop

• The Fed held rates steady at the April FOMC meeting, and, in a close vote, maintained the mild cutting bias in the post-meeting statement. In his last press conference, Chair Powell confirmed that he will stay on the Federal Reserve Board as a Governor “until it is appropriate to leave.”

• The press conference focused on two topics: the Committee’s evolving discussions around adopting a more balanced policy outlook and Powell’s future plans on the Board. On the former, Powell cited a “vigorous” discussion at the meeting and indicated that it is possible the guidance language becomes more balanced in June. On the latter, Powell emphasized the legal actions against the Fed and the associated risks to Fed independence as key reasons for him deciding to stay on as a Governor.

• The Fed inching closer to a more balanced description of the policy outlook reinforces our baseline view that the policy rate is likely to stay unchanged this year. As we outlined in our recent outlook update, we see the Fed on hold near neutral indefinitely (see “The (oil) drumbeat of war”). While a rate hike is not a trivial probability, we continue assess lower policy rates as more likely than higher over the course of this year.

29 April 2026
DB US Economic Perspectives - Consumers think the Fed might hike rates

• As our preview note outlined, we expect the Fed to keep rates unchanged today and delay adopting explicit language in the statement about two-sided risks to the policy outlook (see “FOMC preview: Powell’s last dance?”). Beyond today, we recently updated our Fed forecast and see rates on hold at neutral indefinitely (see “Outlook update: The (oil) drumbeat of war”). That said, while rate hikes are no longer a trivial probability, we see a lower policy rate as more likely than higher this year (see “Could the Fed hike rates in 2026?”).

• Yesterday’s Conference Board (CB) data suggest that households have turned decidedly more hawkish about the interest rate outlook over the coming months, a signal that has proven surprisingly prescient over the past four decades. Indeed, we show the correlation between net interest rate expectations and the year-over-year change in the fed funds rate is 77% since the late 1980s, with a five-month lead for the former. The recent reading is consistent with a year-over-year change in the fed funds rate of +47bps over the coming months.

Good bye and good riddance, it reads … and no wonder 10s rise …

April 29th, 2026
First Trust: So Long, but Not Farewell…

In Jerome Powell’s last meeting as Fed Chair, the FOMC held on rates while issuing a statement with the largest number of dissenters in more than thirty years. Geopolitics – beyond the Fed’s control – have added to economic uncertainty and cloud the outlook as Fed Chair nominee Kevin Warsh (who this morning won the backing of the Senate Banking Committee and will now head to the Senate for final confirmation) looks almost certain to take the reins in just over two weeks…

…So for now, inflation remains a central concern. Just as the Fed worried about tariff pressures in 2025, we believe that the FOMC’s concerns over higher oil prices are a bit misguided. It’s true that inflation measures remain above the Fed’s 2% target, and higher energy costs did show in the most recent readings, but the M2 measure of money has been growing below the historical trend pace over recent years, and higher energy prices are likely to be offset by consumers pulling back in other areas, which will see those other prices eventually decline. We aren’t advocating for rate cuts any time soon, but we do believe that if the Iran War ends sooner rather than later, oil prices will cool, and we could see modest rate cuts before the year is out.

A new Chair Warsh may make some modest changes to the functioning of the Fed as he takes control, but rate cuts aren’t likely to happen anytime soon. Especially with Iran and the US at loggerheads in negotiations and the Strait of Hormuz remaining closed. No wonder the 10-year Treasury yield popped back up above 4.4% today.

We expect the new Fed will look much like the old Fed for now. He will need the votes from other board members and Fed bank presidents, who may be especially cautious about changing their tone so as to not show any signs of political influence. Until the fog of war clears – or there are signs of weakness in the broader economy – expect the Fed to simply hold course.

Oil perculating as the Fed meets making market machinations incrementally more funTERtaining …

29 April 2026
ING: Hawkish Fed members fire warning shot across Warsh’s bow

The Federal Reserve held rates steady with Stephen Miran again voting for a cut, but three members – while not voting for a hike – signalled a growing sense of unease on the inflation front. This suggests a tougher two-way debate on rates at Kevin Warsh’s first FOMC meeting as Chair in June

…Curve flattens on front end scare factor
Earlier, the US 10yr yield had gapped higher, and hit 4.4%. Actually, the whole curve gapped up. The hold-out in the Strait of Hormuz was the catalyst. Some duration selling makes a lot of sense here, where we are in “nowhere land” on a resolution to the war. Extrapolate this, and we could sail back up to the 4.5% area that we hit a few weeks ago. Some of this was echoed in the decision of three Fed members to step away from the underlying easing bias that had dominated policy changes since the wider rate-cutting process began. For these three members, that journey is at an end. The main follow-through from the FOMC outcome is a consolidation at 4.4% for the 10yr, and a further rise in the 2yr to above 3.9% – a flatter curve from the front end. More to come, at least for as long as the hold-off in the Strait continues, and the prognosis there is for the status quo to be in an uncomfortable place.

Between March and April, the implementation notes that accompany the FOMC statement are operationally unchanged, but the tone shifts from active reserve support to maintenance – suggesting the plumbing has calmed enough for the NY Fed Desk to stand down, even as policy stays on hold. Last week the NY Fed cut T-bill buying from US$40bn to US$25bn per month, pointing in the same direction, and indicative of some comfort over the plumbing of the system. The missing ingredient here is the ongoing elevation in the effective funds rate. It remains at 3.64%, a mere 1bp below the rate on reserves at 3.65% (unchanged). It used to be 7bp below (September 2025). The Fed, ideally, would prefer to get it back there. But no big stress here. In all probability, the effective funds rate will be coaxed down as bank reserves slowly rebuild in line with ongoing T-bills buying, even if at a slower pace.

29 April 2026
ING Rates Spark: Big rate decisions as oil tests highs

Despite oil prices testing new highs, markets are not pressuring the European Central Bank or Bank of England to hike this meeting, but the stakes are higher for June. The return of a UK political risk premium could push 10Y gilt yields well above 5%. The Fed set the tone by leaving rates unchanged, but the tone has changed, with three dissents to an easing

US curve flattens on front end scare factor
Earlier Wednesday, the US 10yr yield had gapped higher, and hit 4.4%. Actually, the whole curve gapped up. The hold-out in the Strait of Hormuz was the catalyst. Some duration selling makes a lot of sense here, where we are in “nowhere land” on a resolution to the war. Extrapolate this, and we could sail back up to the 4.5% area that we hit a few weeks ago.

Some of this was echoed in the decision of three Fed members to step away from the underlying easing bias that had dominated policy changes since the wider rate-cutting process began. For these three members, that journey is at an end. The main follow-through from the FOMC outcome is a consolidation at 4.4% for the 10yr, and a further rise in the 2yr to above 3.9% – a flatter curve. More to come, at least for as long as the hold-off in the Strait continues, and the prognosis there is for the status quo to be in an uncomfortable place.

Between March and April, the implementation notes that accompany the FOMC statement are operationally unchanged, but the tone shifts from active reserve support to maintenance – suggesting the plumbing has calmed enough for the NY Fed Desk to stand down, even as policy stays on hold. Last week the NY Fed cut T-bill buying from US$40bn to US$25bn per month, pointing in the same direction, and indicative of some comfort over the plumbing of the system.

The missing piece here is the ongoing elevation in the effective funds rate. It remains at 3.64%, a mere 1bp below the rate on reserves at 3.65% (unchanged). It used to be 7bp below (September 2025). The Fed, ideally, would prefer to get it back there. But no big stress here. In all probability, the effective funds rate will be coaxed down as bank reserves slowly rebuild in line with ongoing T-bills buying, even if at a slower pace…

Cuts eventually after an extended period of time on HOLD … A shop recommending longs and steepeners, discusses how / why they hold out HOPE folks stop trading the very same data over and over again, and consider valuations (largely said as they acknowledge March data upcoming may very well trigger trailing stops) …

April 30, 2026
MS: US Economics and Fixed Income Strategy: April FOMC Reaction: Later cuts and a longer hold

We read the April FOMC decision, statement, and press conference as supporting a shift toward later cuts and a longer hold. We now expect the Fed to remain on hold for the rest of 2026, followed by two 25bp cuts in January and March 2027. Our strategists stay long USTs, move neutral on agency MBS.

Key points

• The Committee is moving from an easing bias to a more neutral stance.

• Disinflation requires proof, the economy is strong enough, and policy is already near neutral, reducing urgency.

• We now expect two 25bp cuts in January and March 2027, after decelerating core inflation.

• Our rates strategists no longer suggest receiving 1y1y fed funds OIS (trailing stop hit), but suggest staying long UST 5y notes and 5y TIPS on a real yield basis, staying in UST 7s30s steepeners, and long 2y Treasury-SOFR swap spreads. They see elevated “energy-to-core pass-through” risk premium as a future monetization opportunity.

• Our FX strategists note that EUR/USD has decoupled from yield differentials and instead has been driven primarily by developments in the Middle East. They expect these dynamics to dominate near-term price action, with yield differentials only reasserting influence once geopolitical uncertainty fades.

• The agency MBS strategists move to neutral basis as increased probabilities of the Fed hiking would reduce bank and FX-hedged insurance demand amid tight valuations vs Treasuries…

…We struggle to understand how, after not being able to pass off much of the tariff costs to consumers, companies in the US will be able to pass off higher energy costs now. If the 1y1y inflation swap rate builds in an “energy pass-through to core” risk premium, we would consider trying to monetize it.

Exhibit 3: 1-year forward 1-year USD CPI swap rate and 1-year USD CPI swap rate

Nevertheless, the 1y1y fed funds OIS rate rose above our trailing stop, so we no longer suggest investors stay received there - for the time being. We intend to reassess opportunities to re‑enter on the received side at a later point.

Otherwise, we remain comfortable with our suggested positions further out the yield curve. We suggest investors stay long UST 5-year notes, long 5-year TIPS on a real yield basis, and in UST 7s30s yield curve steepeners.

We are nearing our trailing stops - which might get triggered by yet another round of (weather affected) March data. But we hold out hope that investors stop trading the same data over and over again, given current valuations…

Agreeing to disagree …

29 Apr, 15:16
NORDEA: FOMC increasingly disagreeing on how to asses the situation
FOMC voted 8-4 in favour of holding rates unchanged.

…The market is now pricing in 50% chance of a hike one year from now. We keep seeing unchanged target rate from Fed. The polarization we are seeing supports this view. It will be difficult for Fed to act in the face of higher inflation and lower growth. It probably won’t help having a new chairman that has been changing his views based on the administration’s political side, who possibly promised Trump to cut rate, but also promised congress to defend Fed’s independence.

Growing up in Concord, MA this next title certainly caught my attention …

30 Apr 2026
UBS: The British are coming

Despite King Charles reassuring US members of Congress that there was no “rearguard action” to re-establish control, the Federal Reserve has acquired a distinctly British accent. Four dissents (in two directions) is a straightforward Bank of England imitation (economics is always more convincing in a British accent). Fed Chair Powell pledged to remain in office as a governor.

This creates a challenging environment for Fed Chair nominee Warsh. Warsh commands a different level of respect within the Fed than Powell, and Powell has had difficulty building support. If Federal Open Market Committee (FOMC) members are not sock puppets, they will base policy votes on economic facts—but if there is an ambiguous decision, Warsh may struggle to influence the outcome…

29 April 2026
UBS: US Economic Perspectives
April FOMC: end of an era

FOMC keeps "extent and timing of additional" language
The FOMC statement kept "In considering the extent and timing of additional adjustments to the target range for the federal funds rate" unchanged, which many observers seemed to think warranted a change. The FOMC statement also failed to make a note of heightened inflation risks and kept the phrase "The Committee is attentive to the risks to both sides of its dual mandate." We did not think the FOMC would adjust the "extent and timing" language but we did think the FOMC would want to acknowledge additional risks to the outlook for inflation.

Apparently three regional Fed Presidents wanted more acknowledgement too. Presidents Hammack, Logan, and Kashkari dissented, but not against the policy action. They dissented because in their view the FOMC statement retained an easing bias. "Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time," said the statement. Presumably they wanted a more balanced, and less dovish, statement. That there were only three of the 12 who wanted a more balanced assessment, and there was so little lean toward the rising inflation risks, could be interpreted as a dovish signal given the center of the FOMC (the eight people who voted for the statement) was in favor of failing to do more. Governor Miran dissented in favor of a 25 bp rate cut, rounding out the 8-4 vote for the statement.

Figure 1: Most disagreement in 30 years

…Powell ended the press conference with, "Thanks very much everyone, I won't see you next time."

Finally, Dr. Bond Vigilante noting bonds signalling concern …

Apr 29, 2026
Yardeni: No More Mr. Nice Guy

We will miss Jerome Powell’s chairmanship of the Fed. He is a nice guy. He did the best that he could as Fed chair from February 5, 2018, through May 15, 2026, when his term as chair expires. Nevertheless, he said he intends to remain a Fed governor for now. He can do so until his term on the Board of Governors expires on January 31, 2028.

President Donald Trump doesn’t share our affection for Powell. He certainly wasn’t nice to Powell. In any event, Trump focused more of his wrath on Iran today. The President posted a message on Truth Social expressing frustration with the stalled nuclear negotiations. He urged Iran to “get smart soon” and explicitly wrote, “NO MORE MR. NICE GUY!”

Reports from yesterday and today indicate that Trump has instructed his aides to prepare for an extended blockade of the Strait of Hormuz and Iranian ports. During a Situation Room meeting on Monday, he reportedly opted for this “prolonged squeeze” over more kinetic military options (like resuming bombing) or walking away from the conflict entirely. Secretary of State Marco Rubio noted earlier today that while the blockade is the current “safer” primary lever, the administration still has plans for “surgical” strikes in reserve should the deadlock continue.

The prospect of a prolonged stalemate—albeit with a ceasefire and a possible resumption of the shooting war at any time—pushed oil prices higher to around $110 a barrel this evening. The stock market took it in stride with a 0.3% drop so far this week (chart). On April 21, we (belatedly) recommended overweighting the S&P 500 Energy sector as a hedge against a prolonged blockade of oil from the Arabian Gulf. XLE is up 5.7% since then.

The bond market is starting to signal concerns that the energy shock might cause a more persistent, rather than transitory, inflation problem. The 10-year Treasury bond yield is up from 3.95% on February 27 (a day before the war started) to 4.25% this evening (chart). The widely used proxy for the 10-year expected inflation rate accounts for most of the increase. The Bond Vigilantes are starting to mutter: “No more Mr. Nice Guys.” …

… Moving along TO a few other curated links from the intertubes. I HOPE you’ll find them as funTERtaining (dare I say useful) as I do … …

First up, the good Doctor SLOK says what we ALL really really want …

April 30, 2026
Apollo: Households Want Yield Without Duration Risk

Since the Fed started cutting interest rates in 2024, households have been buying the front end of the yield curve and selling the long end, see chart below.

Missed this one from the other day … seems like was once again, spot ON (and why I continue to advocate one and all find / read / follow EBB) …

Apr 29, 2026
Bloomberg: Bond Traders Ramp Up Wagers Hedging for 5% Yields as Oil Surges
Traders in the Treasury options market are bracing for long-dated bond yields to surge past 5% as a rally in oil prices continues unabated.

(Bloomberg) — Traders in the Treasury options market are bracing for long-dated bond yields to surge past 5% as a rally in oil prices continues unabated…

… AND a view from The Terminal DOT COM …

April 30, 2026 at 4:30 AM UTC
Bloomberg: A crude awakening on inflation is hitting markets
Hope that the Iran conflict will end any time soon is being abandoned.

…The story seems clear. The Strait of Hormuz is still closed, there’s no longer any pretense of serious negotiations to open it, and oil prices have reacted by blasting upward. Helped along by the United Arab Emirates’ withdrawal from OPEC+, Brent crude — the world’s most followed benchmark — topped $120 per barrel on Wednesday and closed higher than at any time during the conflict.

That drove a series of classic alarm bells across global markets, taking out closely watched landmarks. Bond yields surged, with 10-year gilts topping 5% for the first time since 2008; 30-year Treasury yields hitting 5% for the first time this year; and the Japanese yen over 160 to the dollar. These all suggest alarm about inflation. The war is at a tipping point where markets accept that it will seriously damage the global economy:

They also had to absorb news of a more hawkish Federal Reserve than had been expected (we’ll cover below), which made two-year Treasury yields jump by 11 basis points, their biggest rise in more than six months:

So what happened to the stock market? The Nasdaq 100 gained for the day, while the S&P 500 was flat. During the war’s first month, crude and the S&P 500 had a perfectly inverse relationship. During the second just ended, they rose together. The S&P hit a low when Brent logged its previous high on March 30. Since then, oil has reclaimed its peak, while the S&P rallied by 13%:

The war isn’t over, and many of the world’s most important markets are behaving as though it’s getting more damaging. But for US stocks, they think it’s over. Measures of volatility show that the amount people are paying to hedge future price moves in both equities and bonds are back where they were before the attack on Iran:

Polymarket now puts odds of only 52% on the Strait reopening by the end of June — implying we’re not even half way through the blockage. A protracted stalemate that creates shortages now looms as the likeliest outcome…

…J’s Last FOMC

As non-event meetings go, Jerome Powell’s final session chairing the Federal Open Market Committee was spectacular. Rates are unchanged, and so is guidance. But four of the committee’s 12 voters dissented from that decision. Such lack of consensus hasn’t been seen since October 1992, the last FOMC before Bill “It’s the economy stupid” Clinton won the presidency.

So unfazed was Powell by all this dissension that he announced that he’d stay on as a mere governor and member of the committee under successor Kevin Warsh until “it’s appropriate for me to leave.” He isn’t looking to a be a “high-profile dissident”:

My intention isn’t to interfere. I was a governor for almost six years. The tradition is that you work with the chair and you try to collaborate. That’s the attitude I will take.

He has two years left in his term as governor, and won’t stand down until the Justice Department’s investigation into his handling of the Fed’s building renovations is “well and truly over, with transparency and finality.” He will judge when that’s appropriate.

The thread binding the dissents and Powell’s decision to stay is a determined effort to exert the independence not only of the Fed, but also of the committee’s individual voting members, most of whom now have terms that extend longer than Warsh’s four years as chairman. It will be his job to thrash out a consensus, and that is arguably easier now his new colleagues have shown their positions. If he cannot deliver rate cuts as President Donald Trump wants, he can blame them.

Powell defended Fed independence by pointing out that markets trust it to control inflation. Longer-term expectations have indeed remained remarkably stable throughout the shocks of the last few years. However, while the five-year/five-year forecast — reflecting inflation from five to 10 years’ hence and the Fed’s favored measure — remains at only 2.25%, shorter term swaps forecasts are surging upward:

Any discussion of cutting rates this year is moot. Futures markets no longer expect it, while the rate-sensitive two-year yield has surged with rate expectations:

Bloomberg’s World Interest Rate Probabilities function shows how drastically the war blew the Fed off course. On the war’s eve, three cuts were penciled in for 2026:

Meanwhile, the European Central Bank, due to make its own announcement shortly after you receive this, is in a tougher spot as Europe is more directly exposed to the conflict. In February, it was expected to leave rates unchanged all year. Now, traders are expecting three hikes, starting in June:

Trump wants rate cuts, but it’s hard to feel sorry. The impasse in the Strait has thwarted any chance of that, while his administration’s brutish attempts to interfere with the central bank appear to have robbed it of the chance to replace Powell with someone more amenable. The committee is now setting out its stall to behave like the Bank of England, where decisions come down to narrow majorities and the governor is sometimes in the minority. That’s not how the Fed has typically operated, but it’s a model that works elsewhere, and the bullying tactics are chiefly responsible.

Underscoring the point, Treasury Secretary Scott Bessent attacked Powell for staying on:

It’s highly unusual for someone who says he’s an institutionalist and cares about norms at the Fed. This is a violation of all Federal Reserve norms.

It’s hard to take this seriously. Weaponizing the prosecution system to to get rid of Fed governors you don’t like is a much greater violation of such norms. And the Fed’s building, currently being renovated so controversially, bears the name of Marriner Eccles — a highly respected chairman who stayed on as a governor once he left the chair, just as Powell is planning.

CHARTS … here’s a good, if scary, one …

April 29, 2026
DAILY CHARTBOOK: “The bond market is yelling from the rooftops that inflation is about to soar”

Finally, from those wolves on Wall …

Apr 29, 2026
WolfST: Regime Change: Powell, Chair of Mega-QE & “Ample Reserves Regime,” to Be Replaced by Warsh, who Wants a Smaller Balance Sheet - But Powell said he’d stay as governor until “the investigation is well and truly over,” and promised “to keep a low profile” and support the new chair.

… THAT is all for now. Off to the day job…

Equity futures edge higher, yields UNCH and EARL steadily BID …

Bloomberg: Trump Tells Aides to Prep for Lengthy Hormuz Blockade, Report Says

(Bloomberg) -- President Donald Trump told his aides to prepare for an extended US Naval blockade of the Strait of Hormuz, the Wall Street Journal reported, as the US looks to intensify economic pressure on Iran as the war enters its third month.

CNBC: Trump threatens Iran with AI picture of himself with a gun: ‘No more Mr. Nice guy!’

… AND a few thoughts …

On heels of the ‘news’ above of a prolonged Persian Excursion AND in concert with visual of ‘47 with a gun, I’ve really little to add.

MARKETS seem underwhelmed or willing to try and focus on EARNINGS (remaining robust as NET PROFIT MARGINS AT RECORD HIGHS …

Color ME impressed and equally as funTERtaining, all of this is happening as long bond yields at / near highs YTD …

30yy WEEKLY (line): 5.00% firmly on the radar screen …

#GotBONDS?

Entire term structure seems to be steadily grinding and there haven’t been any reported ‘accidents’ (Blue Own situation handled by PIMCO?) and so, what could possibly go wrong?

Stocks BID, earnings FINE, economy seems OKAY on top line and consumers, well, consuming … A quick recap of some the funTERtainment yesterday … our collective single largest asset — our home — remains well bid BUT some … disinflation …

ZH: US Home Prices Dipped In February For First Time Since June 2025

... Never fear, though, as consumer confidence remains unfazed by ALL …

ZH: Conference Board Confidence Unexpectedly Jumps To Highest In 2026

… table then was set for … a SO SO auction …

ZH: Tailing 7Y Auction Sees Lukewarm Foreign Demand, Jump In Direct Buyers

… supply is DONE, Trump sportin’ guns in his threats to Iran, EARL BID and here we are, set up for JPOWs final (?) FOMC meeting as chair … Over to my BondBot Intern …

Oil Blocks the Strait, Bonds Shrug—Powell Gets the Last Word

Since 4pm ET, Treasuries did their best impression of “nothing to see here”—10s up ~3bps, 30s +4bps, 2s barely blinking—as headlines screamed extended Strait of Hormuz disruption and crude stayed stubbornly bid. Equities? Mildly green, because apparently geopolitics is now just background noise. Oil’s strength nudged inflation nerves, but not enough to spark a real rates tantrum. The bond market is waiting—politely, sarcastically—for Powell’s finale at the FOMC. Translation: mortgages stay sticky, consumers keep paying, and the curve stays confused.

Punchline: The world may be on fire, but bonds are waiting for Powell to bring the extinguisher—or the gasoline.

… not terrible … be careful out there.

Onwards and upwards TO the reason many / most of you are likely here … whatever it may be on Global Wall’s mind but first … here is a snapshot OF USTs as of 703a:

… for somewhat MORE of the news you might be able to use … a few curated links for your dining and dancing pleasure …

• IGMs Press Picks: 29 April, 2026

• NEWSQUAWK US Market Open: Crude benchmarks climb, Equites firm on NXPI earnings, Fed/BoC/BCB, AMZN, GOOG, META, MSFT ahead … A modestly bearish start in fixed benchmarks, given continued upside in the energy complex. Gains for energy occurring in recent trade despite a lack of fresh driver, and potentially as participants take another look at the WSJ reporting around a prolonged Hormuz closure, as while this is less risky than strikes, it does suggest a further extension of the ongoing supply disruption … Amidst this, fixed benchmarks are at lows. USTs to a 110-24+ base, but with downside of just a few ticks as we await the FOMC. The Fed is expected to maintain its rate in a 3.50-3.75% band, with focus on the guidance from Chair Powell in what may be his last meeting as Chair. As a reminder, the Senate Banking Committee is today expected to advance the nomination of Warsh to the broader Senate.

• Reuters Morning Bid: Fed sails into unchartered waters as Powell bows out

• Yield Hunting Daily Note | April 28, 2026 | Nuveen Muni Mergers, NXG Rights, Blackrock Muni Coverage

• Finviz (for everything else I might have overlooked …)

Moving from some of the news to some of THE VIEWS of Global Wall you might be able to use …

A large British firm on consumer views of the economy (some housing price relief may be on the way) … also weekly rundown of who owns what …

28 April 2026
Barclays US Economics Research: April consumer confidence rises on stronger expectations of future economic activity

The Conference Board's consumer confidence index rose 0.6pts in April, to 92.8. The gain reflects a more optimistic assessment of future economic activity that offsets a weaker view of current activity. The outlook for the future climbed on a more optimistic view of the labor market.

28 April 2026
Barclays US Economics: First Look: February house prices show some early signs of price relief

The S&P Cotality 20-City (-0.05% m/m) house price index saw a decline in February alongside an unchanged FHFA index (0.0% m/m). February's S&P data represent the first decline since June 2025, indicating the potential for some greater affordability if prices continue to decline…

29 April 2026
Barclays Equity Strategy - Who Owns What: FOMO in Tech, uneven re-risking elsewhere

Global equities back to highs but not positioning, as systematics & retail lag. Oil tail risk feels under-priced, but liquidity & earnings remain supportive of equity inflows, while fiscal dominance & inflation hit bonds. Narrow breadth in Tech/US, however, as Europe/consumer get sold…

…Key pain trades. Equities down, Oil/Energy up, Europe/RoW>US equities, Semis down, AI losers and consumer plays up, EU Banks down…

…Figure 9. Fear-Greed index is back to elevated levels

…Inflation and fiscal dominance concerns hit bonds