Market drivers and catalysts
Equities: US slipped on hotter inflation, Europe weakened on risk-off sentiment, Asia traded mixed as chip pressure offset Japan’s resilience
Volatility: VIX lower; inflation, oil and geopolitics remain in focus
Digital Assets: Bitcoin near USD 81k, ETF outflows continue
Fixed Income: US Treasury yields pushing on cycle highs. Japan’s government bonds under pressure.
Currencies: US dollar firms slightly, sterling choppy on political focus
Commodities: Wheat jumps limit up on lower U.S. production outlook, oil stays elevated, gold and silver rebound strongly
Macro events: US April PPI, US Treasury to auction 30-year T-Bonds
Macro headlines
US headline inflation rose to 3.8% YoY in Apr 2026 (vs 3.3%, above 3.7% forecast), driven by the oil shock. Energy surged 17.9%, led by gasoline (+28.4%) and fuel oil (+54.3%). Shelter (3.3%) and food (2.3%) also firmed. On a monthly basis, CPI increased 0.6% (down from 0.9% in March). Core inflation rose to 2.8% YoY (vs 2.6%, above forecast), with 0.4% MoM growth. Real wages declined for the first time in three years, while the US is issuing over $35.5bn in tariff refunds after a court ruled the policy unlawful.
The US is issuing over $35.5bn in tariff refunds after a court ruled the policy unlawful.
Japan’s current account surplus rose to a record JPY 4,681.5 billion in March 2026 from JPY 3,625.3 billion a year earlier, beating expectations. The goods surplus increased to JPY 830.5 billion as export growth of 11.7% outpaced imports at 10.0%, and the primary income surplus also widened. The secondary income deficit narrowed, while the services deficit widened sharply to JPY 257.8 billion.
The US recorded a $215 billion budget surplus in April 2026, down from $258.4 billion a year earlier and below expectations. Spending rose to $622.3 billion, led by Social Security, interest payments, Medicare, and defense, while receipts fell to $837.3 billion, mainly from income taxes. The fiscal year deficit has reached $954 billion so far this fiscal year.
Macro calendar highlights (times in GMT)
0800 – IEA's Monthly Oil Market Report
0900 – Eurozone Q1 GDP estimate
1100 – US Weekly MBA Mortgage Applications
1230 – US April PPI
1430 – IEA's Weekly Crude and Fuel Stocks Report
1700 – US Treasury to Sell USD 25 billion 30-year Bonds
During the day: OPEC’s Monthly Oil Market Report
Earnings this week
Tuesday (yesterday): Siemens Energy, KBC Group, Bayer, Constellation Software
Wednesday (today): Cisco Systems, Siemens, Softbank Group, Deutsche Telekom, Merck, E.ON, RWE, Nebius Group
Thursday: Applied Materials, Ross Stores, Nu Holdings
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 fell 0.2%, the Nasdaq dropped 0.7%, while the Dow finished broadly flat as hotter April CPI renewed concerns that higher energy costs could pressure earnings and keep Fed rate cuts further away. Large-cap tech was mixed, with Alphabet, Amazon, Microsoft and Tesla down more than 1%, while Nvidia and Apple edged higher. Chip stocks also softened, with Broadcom and AMD down around 2% on policy concerns, while Hims & Hers slumped 15% after missing first-quarter expectations. Investors now look to earnings and Fed commentary for the next steer.
Europe: European equities fell around 1%, with the STOXX 600 hitting a one-week low as hotter US inflation fed a broader risk-off move. The DAX dropped around 1.6%, the Euro STOXX 50 lost around 1.5%, and the CAC 40 fell 0.9%, while UK stocks lagged as political uncertainty weighed on banks and Vodafone came under pressure. Tech and retail led the declines, while food, beverages and healthcare held up better as investors rotated into more defensive areas. Markets now watch whether inflation concerns spill further into rates and earnings expectations.
Asia: Asian equities were mostly weaker, with the Kospi down 2.3% as chip stocks dragged on regional sentiment and the MSCI Asia Pacific Index fell 0.8%. Japan’s Nikkei rose despite softer signals from futures, while most other regional markets traded lower after Wall Street’s inflation-led pullback. JD.com ADRs rose as much as 3.4% after stronger first-quarter results, helped by JD Retail strength and narrower food-delivery losses, even as net income fell sharply. Investors now watch whether US inflation pressure and weaker chip sentiment continue to weigh on the region.
Volatility
Volatility eased on Tuesday, but investors remain focused on inflation, oil and geopolitics. The VIX closed at 17.99, down 2.12%, while the S&P 500 slipped 0.16% to 7,400.96. Today’s focus shifts to US producer price inflation (PPI), crude oil inventories and the 30-year Treasury auction, with elevated oil prices and the Trump-Xi meeting in Beijing continuing to shape sentiment around inflation and interest rates.
SPX options imply an expected move of roughly 72 points, or 0.98%, into Friday’s expiry.
For today’s expiry, the near-the-money options chain continues to show a defensive skew: around the 7,400–7,415 strikes, put implied volatility sits roughly 4 percentage points above call implied volatility, signalling that investors are still paying more for downside protection than upside exposure.
Digital Assets
Digital assets traded cautiously after hotter-than-expected US inflation data reinforced expectations for higher interest rates later this year. Bitcoin held near USD 81,000, while Ether traded around USD 2,300. Crypto-related equities were weaker, with IBIT down around 1.4% at USD 45.80 and ETHA lower by roughly 2.4% at USD 17.24.
ETF flows softened further on 12 May, with US spot Bitcoin ETFs recording approximately USD 115mn in net outflows, while spot Ethereum ETFs saw around USD 40mn leave the sector. Among major altcoins, Solana traded near USD 95, XRP near USD 1.45, and Dogecoin around USD 0.11, keeping the broader crypto tone cautious rather than decisively risk-on.
Defensive positioning also remained visible in options markets, where put activity in MSTR, CRCL and ETHA outweighed selective bullish flows in COIN, IREN and IBIT.
Fixed Income
US Treasury yields rose further after the US April CPI numbers came in higher than expected, with the benchmark 2-year treasury yield crawling more than four basis points higher intraday Tuesday to tease the key 4.00% level before retreating slightly. The benchmark 10-year treasury yield rose some five basis points, sending the benchmark to its highest daily close since July of 2025 at 4.46%. A US Treasury auction of US 10-year notes saw soft demand.
Japan’s government bond yield curve steepened further, sending long-dated JGB yields to fresh cycle highs. Policy expectations for the BoJ remain anchored as the benchmark 2-year JGB yield hovers near cycle highs around 1.40%, but the benchmark 10-year JGB yield rose another two basis points to a new high since the late 1990’s at 2.58%, and the benchmark 20-year JGB briefly rose some five basis points and above 3.50%, also a new high since the late 90’s, before retreating to below 3.49%.
Commodities
Chicago wheat futures climbed by their daily trading limits on Tuesday after the USDA projected the U.S. wheat harvest will fall to the lowest level since 1972, with weather damage driving forecasts for hard red winter wheat production to a 1957 low. Before easing back during Asian trading, both contracts reached 2024 highs, leaving CBOT wheat up by around one-third year-to-date. The warning also comes at a time when surging fertilizer prices risk dampening global production further during the 2026/27 season.
Oil prices dipped after gaining around 8% over the previous three sessions as the global oil market continued to tighten amid limited prospects for a reopening of the Strait of Hormuz. Trump said the Iran war is unlikely to feature heavily in talks in Beijing this week, adding that “we have Iran very much under control”. That control, however, does not extend to the Strait of Hormuz, which remains effectively closed with both Iran and the U.S. maintaining naval blockades. Later today, both the IEA and OPEC will publish their Monthly Oil Market Reports.
Gold, and especially silver, rebounded strongly after Monday’s technical and momentum-driven correction attracted fresh buying ahead of key support levels, particularly in silver near USD 83. The move potentially signals an improving outlook for both precious metals despite reports that India, the world’s third-largest bullion importer, has more than doubled tariffs on gold and silver imports in an effort to defend the rupee. While the higher tariffs may temporarily dampen demand, gold remains deeply ingrained in Indian culture and long-term investment behaviour.
Currencies
The US dollar edged higher Tuesday after the US April CPI release sent US treasury yields higher and amidst ongoing uncertainty in the Hormuz Strait that is keeping oil prices elevated. EURUSD is still rangebound and drifted back to 1.1735 while the more rate-sensitive USDJPY remains elevated near 157.70, with considerable focus on the 158.00 area, which is the highest level seen since the dramatic official Japanese intervention began on April 30.
Sterling weakened Tuesday as markets weigh the risk of a PM Starmer exit as high-profile cabinet ministers are said to be counselling him to resign. Unknown is whether his replacement would be a new centrist- or more left leaning figure. EURGBP rose as high as 0.8698 Tuesday, nearly a three-week high before settling back below 0.8670, while GBPUSD almost touched 1.3500, down from above 1.3600 on Monday, before rebounding to the 1.3540 area.
The Norwegian krone continues to enjoy strong support from higher energy prices and the Norges Bank’s recent hawkish turn, with EURNOK pressing to new cycle- and three-year lows below 10.80 Tuesday and NOKSEK likewise running up to new cycle highs above 1.0100.
