Monday, May 18

The dominant story over the last 24 hours was the bond-and-oil squeeze, with higher Treasury yields and firmer energy prices finally overpowering the AI-led equity bid that had carried U.S. stocks to record territory earlier in the week. The S&P 500 had closed at a record high on Thursday before giving back ground, while the Nasdaq also hit an all-time high before the rally stalled as desks priced less room for the Fed to ease.

The 10-year Treasury yield rose to around 4.59%, its highest in more than a year, after hotter U.S. inflation data and rising energy costs pushed breakeven expectations higher. That move mattered because it was not just a duration story: the move in yields came alongside strength in energy and a firmer dollar, a combination that typically tightens financial conditions and tests equity multiples. The dollar gained against major currencies as traders leaned into the less-dovish rates backdrop, while overseas equities were mostly lower, with Canada’s S&P/TSX Composite falling 1.3% to 33,833 on Friday as miners and the global bond selloff dragged.

In commodities, oil stayed central to the inflation narrative, with WTI holding around $102 a barrel in late-week trading as markets watched Strait of Hormuz risks and the potential for further supply disruption. Gold was steadier than crude, reflecting a hedge against policy and geopolitical risk rather than a clean risk-off bid, while bitcoin and other major cryptos were little changed and not the day’s main macro driver.

The next focal point is Tuesday’s U.S. CPI release, because traders are now debating whether April’s hotter price pressure was a one-off or the start of a more durable inflation re-acceleration that would keep the 10-year near cycle highs and push back rate-cut pricing further.