Market drivers and catalysts
Equities: US stocks were mixed, Europe rose on energy and de-escalation hopes, while Asia struggled with oil and yields.
Volatility: VIX eases, bond yields elevated, Iran tensions cool slightly, Fed minutes and Nvidia earnings ahead
Digital Assets: Bitcoin near USD 77k, ETF outflows continue, yields and macro dominate sentiment
Fixed Income: Global bonds remain under pressure, especially at long end of curve, where yields rose again early Tuesday
Currencies: Recent stronger USD focus remains on rising treasury yields. Sterling recovers again.
Commodities: Oil remains elevated near USD 110 while gold holds above USD 4,500
Macro events: UK Employment and Claims data, Canada April CPI
Macro headlines
Trump said he called off a planned strike on Iran for Tuesday after appeals from Gulf allies, citing “serious negotiations”.
Kevin Warsh will be sworn in as Fed Chair by President Trump on Friday at the White House, as Fed officials continue to signal patience on rate cuts amid persistent inflation concerns.
Japan’s Q1 2026 GDP grew 2.1% annualized, beating the 1.7% consensus, with consumption up 0.3% q/q and net exports adding 0.3 ppt; the GDP deflator stayed at a stronger-than-expected 3.4%, bolstering the case for further BoJ hikes.
RBA Assistant Governor Sarah Hunter warned inflation expectations risk drifting higher and that a sharp slowdown might be needed to re-anchor them if they slip out of control, but RBA minutes showed that the bank felt that the three consecutive meetings of rate hikes would give the board a chance to pause and assess the impact on Australian households.
The US NAHB/Wells Fargo Housing Market Index rose to 37 in May 2026 from 34 in April, beating forecasts of 35. Current sales, six-month sales expectations, and buyer traffic each gained three points (to 40, 45, and 25, respectively). Builders cutting prices fell to 32% from 36%, though the average discount increased to 6% from 5%.
Macro calendar highlights (times in GMT)
· 0600 – UK Mar. Unemployment Rate / Employment Change
· 0600 – Uk Apr. Claimant Count Rate / Jobless Claims Change
· 1200 – US Fed’s Waller to speak
· 1215 – US Weekly ADP Employment Change for week ending May 2
· 1230 – Canada Apr. CPI
· 1400 – US Apr. Pending Home Sales
G-7 finance ministers and central bankers meet in Paris
Earnings this week
Tuesday: The Home Depot, Keysight Technologies
Wednesday: Nvidia, Analog Devices, TJX Companies, Lowe’s, Intuit, Tokio Marine Holdings, Target
Thursday: Walmart, Deere, Ross Stores
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The Dow rose 0.3% to 49,686.12, while the S&P 500 slipped 0.1% to 7,403.05 and the Nasdaq fell 0.5% to 26,090.73. Technology lagged as higher oil prices and elevated bond yields revived inflation concerns, and Nvidia fell 1.3% ahead of Wednesday’s earnings, the week’s main AI stress test. Regeneron dropped 9.8% after its melanoma drug trial failed to meet its main goal, while Seagate lost 6.9% after capacity comments raised questions about how fast storage supply can meet AI demand. Dominion rose 9.4% and NextEra fell 4.6% after their $66.8 billion all-stock utility deal.
Europe: The Stoxx 600 rose 0.5% to 610.17, the DAX gained 1.5% to 24,307.92, the FTSE 100 added 1.3% to 10,323.75, and the Euro Stoxx 50 advanced 0.4% to 5,849.00. Markets recovered from early weakness as reports of a possible temporary waiver on Iranian oil sanctions softened the inflation scare, although bond yields still kept investors awake without needing extra coffee. Deutsche Boerse rose 4.7% after TCI disclosed a 5.15% stake, while Shell gained 3.0% and Centrica added 4.1% as energy shares led in London. Investors now watch whether oil relief lasts.
Asia: Asian markets weakened as rising oil prices, higher bond yields and China growth concerns weighed on sentiment. Japan’s Nikkei 225 fell 1.0% to 60,815.95 and Hong Kong’s Hang Seng dropped 1.1% to 25,675.18, while South Korea’s Kospi rebounded from a deep intraday selloff to close up 0.3% at 7,516.04. Samsung Electronics rose 3.9% after a court ruling limited strike disruption risks, and SK hynix gained 1.2% as chip buyers returned. Baidu beat quarterly estimates, with core AI-powered revenue rising 49% and passing half of general business revenue for the first time.
Volatility
Market volatility eased slightly on Monday, but investors are still navigating a market shaped by geopolitics, oil prices, and rising bond yields. The VIX closed at 17.82, down 3.3%, as crude oil prices retreated after President Trump paused a planned military strike on Iran and signalled renewed negotiations. That helped calm immediate inflation fears tied to energy markets, although underlying caution remained visible. Short-term volatility indicators were mixed, with the VIX1D falling sharply to 13.10 while the VIX9D rose to 16.86, suggesting investors remain more concerned about risks later this week than today’s session alone.
Bond yields are becoming an increasingly important driver for equities. The US 10-year Treasury yield held near 4.60%, while the 30-year yield remained above 5.1%, as investors worried that elevated oil prices could keep inflation pressures persistent and delay any meaningful easing from central banks. Attention now turns to Wednesday’s Fed minutes, UK and EU inflation data, Thursday’s US PMI releases, and Nvidia earnings, which remain a key sentiment test for the broader AI trade and technology sector.
SPX weekly options currently imply an expected move of roughly 104.5 points, or 1.41%, into Friday’s 22 May expiry. Meanwhile, today’s SPX options positioning continued to show a mild downside protection bias, with near-the-money puts trading slightly richer than comparable calls. That suggests investors are still hedging against short-term downside risk, although the positioning no longer reflects panic-style protection demand.
Digital Assets
Digital assets remained under pressure as rising bond yields and macro uncertainty continued to weigh on speculative assets. Bitcoin traded near USD 76,800, while Ethereum held around USD 2,130, both extending last week’s pullback despite progress in Washington on crypto regulation. Investors initially welcomed the US Senate Banking Committee’s approval of the Clarity Act, but enthusiasm faded as markets shifted their focus back to inflation risks, elevated oil prices, and the prospect of interest rates staying higher for longer.
Crypto-related equities and ETFs also weakened. IBIT fell 2.9% and ETHA dropped 4.5%, while US spot Bitcoin ETFs recorded roughly USD 448mn in net outflows on Monday, including approximately USD 63mn from IBIT. Ethereum ETFs also continued to see withdrawals. Outside Bitcoin and Ethereum, weakness remained broad but relatively orderly, with Solana trading near USD 85, XRP around USD 1.38, and Dogecoin near USD 0.18.
Interestingly, options activity in crypto-linked equities still carried a cautiously constructive tone. Miners and higher-beta names such as CIFR and IREN attracted upside positioning, while MSTR continued to see large long-dated call activity that looked more like stock-replacement exposure than speculative short-term trading. At the same time, continued demand for long-dated puts in names such as COIN and ETHA suggests investors are still maintaining protection against further downside rather than fully embracing risk again.
Commodities
Crude trades softer, with Brent holding near USD 110 after the President, at the request of several Gulf states, suspended a planned Tuesday attack, allowing what he described as “serious negotiations” to continue. No ships have reportedly left Iran’s main export terminal during the past 10 days, potentially increasing the prospects for a deal. Overall, traffic through the Strait of Hormuz remains only a fraction of pre-war levels, despite the waterway accounting for roughly one-fifth of global oil supply.
Gold continues to hold above support around USD 4,500, with the next key downside level being the 200-day moving average, last seen near USD 4,355. Traders remain focused on the Middle East crisis and the inflationary impact of sustained higher energy prices, which are pushing global inflation higher while forcing central banks to shift their focus toward potential rate hikes. This helps explain the current reaction function, where escalating tensions can weigh on gold through higher yields and a stronger dollar, while any credible path toward de-escalation or peace may ultimately support prices.
Fixed Income
US Treasury yields backed off the intraday cycle highs Monday, likely in part on crude oil prices likewise pulling back from their strong Monday rally, but had rebounded from lows early Tuesday. The benchmark US 2-year treasury yield trades near 4.06% early Tuesday after a 4.10% high. The benchmark 10-year trades 4.60% and the 30-year at 5.138%, just above Monday’s close at 5.12%, which is the highest daily close for the benchmark since 2007.
Japan’s government bonds remain under pressure, especially at the long end of the yield curve. The benchmark 30-year JGB rebounded over five basis points to trade near 4.15% in late Tokyo trading hours Tuesday, though still below the intraday spike in the yield on Monday above 4.2%. The benchmark 10-year JGB rose five basis points as well, eyeing the highest closing level since the late 90’s near 2.79%.
Currencies
The US dollar rally was pushed back Monday, perhaps in part on hopes that an Iran peace deal is attainable as crude oil prices dropped, but USD strength reasserted Tuesday as the focus on rising US treasury yields remains. EURUSD pushed lower to 1.1634 by early European hours Tuesday after a 1.1662 high in early Asian hours. USDJPY continued to edge back toward the Monday highs just above 159.00 as the market seems determined to test Japan’s Ministry of Finance once again on its will to intervene to prevent further JPY weakness.
Sterling rebounded sharply after the candidate widely seen as most likely to replace Keir Starmer as Labour leader and eventual Prime Minister, Andy Burnham, said that he had ruled out making any changes to the UK’s borrowing limits if he were to eventually lead the nation. This reversed much of the recent weakness in sterling versus the euro, as EURGBP plunged back to 0.8680 after trading as high as 0.8730 Monday. GBPUSD rebounded as high as 1.3450 – a key line of resistance – before a USD rebound Tuesday pushed the rate back toward 1.3400.
The Australian dollar trades heavily, perhaps in part on the RBA minutes showing the board’s desire to wait and see the impact of the recent hiking regime on households before any further consideration of policy tightening , but perhaps as well on weakness in commodity prices. AUDUSD trades 0.7127 early Tuesday after a high of 0.7184 Monday and is nearing an important support, the 0.7102 low of the range since mid-April.
