Will policy divergence rekindle dollar debasement?

S&P 500 +0.77% to 7,501.24

US 10-year yield  +3.2 basis points to 4.489% 

Spot gold  -1.36% to $4,649.48 an ounce

DXY  +0.59% to 98.87

Key data to move markets today

EU: Italian CPI
USA: NY Empire State Manufacturing Index and Industrial Production

Global Macro Updates

Beijing summit day one. The first day of the Trump - Xi summit in Beijing concluded with both sides describing the discussions as positive and constructive, although the session produced few concrete outcomes. This was broadly in line with expectations, as markets had anticipated little beyond a possible extension of the countries' fragile trade truce. According to the White House, the talks covered Chinese investment in the US, progress on fentanyl and increased Chinese purchases of US agricultural products. The statement also noted that both sides agreed the Strait of Hormuz should remain open and that Iran should not obtain a nuclear weapon.

Treasury Secretary Bessent said in an interview with CNBC that he expects the US and China to hold constructive discussions on artificial intelligence and that announcements involving large Boeing orders, as well as energy and agricultural purchases, could emerge during the visit. Separately, reports indicated that China briefly approved some shipments of US beef as a potential goodwill gesture before reversing many of those approvals. Reuters also reported that the US had cleared several Chinese firms to purchase Nvidia's H200 chips, although corresponding Chinese approval for those transactions had not yet been granted.

Taiwan remained a notable point of tension during the first day of talks. Xi warned that mishandling the issue could lead to conflict and cautioned against creating what he described as a highly dangerous situation. Bessent said Trump would address Taiwan in greater detail in the coming days. The administration's statement on the meeting did not mention the island, while Secretary of State Marco Rubio said the issue did not feature prominently in the talks. The US State Department had previously announced an $11 billion arms sale to Taiwan in December, which has yet to be finalised.

At the day-one banquet, Trump invited Xi to Washington on 24 September. Looking ahead, the leaders are scheduled to hold a bilateral meeting at 23:40 ET, followed by a lunch, joint press statements at 02:00 ET on Friday and Trump's departure at around 05:00 ET.

US Stock Indices

Dow Jones Industrial Average  +0.75%
Nasdaq 100  +0.73%
S&P 500  +0.77%, with 6 of the 11 sectors of the S&P 500 up

On Thursday stocks tied to AI remain investors’ primary focus.

The Nasdaq Composite was  +0.88%, or +232.22 points to 26,635.22 and the S&P 500 rose  +0.77%, or +56.99 points to 7,501.24. The Dow Jones was  +0.75%, or +370.26 points, to 50,063.46.

In corporate news, Apple's two-year-old partnership with OpenAI has become strained, according to people familiar with the matter as reported by Bloomberg news. The AI startup has not seen the expected benefits from the arrangement and is now preparing potential legal action.

China agreed to purchase 200 Boeing aircraft, President Donald Trump said in an interview with Fox News Channel's Sean Hannity. However, the order fell short of the 500 737 Max and widebody aircraft that Chinese airlines had been expected to buy under the most ambitious scenario of a landmark deal.

Shares of freight brokerage companies declined after a Supreme Court ruling that may expose the industry to new lawsuits.

Activist investor Elliott Investment Management has taken a stake in medical device maker Dexcom in a transaction that will add two independent directors to the company's board, according to a company statement.

Nvidia's key server assembly partner, Hon Hai Precision Industry, reported a stronger-than-expected increase in quarterly profit, underscoring sustained spending on hardware critical to AI development.

S&P 500 Best performing sector

Information Technology  +1.85%, with Enphase Energy  +14.31%, Cisco Systems  +13.41% and Hewlett Packard  +6.42%

S&P 500 Worst performing sector

Materials  -0.80%, with Albemarle  -4.90%, Celanese  -4.40% and Newmont  -2.21%

Mega Caps

Alphabet -0.38%, Amazon  -1.08%, Apple  -0.22%, Meta Platforms  +0.29%, Microsoft  +1.04%, Nvidia  +4.39% and Tesla  -0.44%

Information Technology

Best performer: Enphase Energy  +14.31%
Worst performer: Qualcomm  -6.41%

Materials and Mining

Best performer: FMC  +6.52%
Worst performer: Albemarle  -4.90%

Corporate Earnings Reports

Posted on Thursday, 14 May from The Pulse, our real-time AI-driven news tool. Available exclusively on the EXANTE Web Platform.

Ondas reported Q1 revenue of $50.1 mn vs $39 mn estimate along with adjusted EBITDA of negative $10.9 mn vs consensus of negative $20 mn. Backlog stood at $457 mn, while cash reached $1.48 bn. Full-year 2026 revenue guidance was raised to $390 mn and the company expects profitability by Q1 2028. Acquisitions of Mistral and World View were completed, a Palantir partnership launched the SkyWeaver AI platform, and a joint venture was formed with Heidelberg for European manufacturing. CEO Eric Brock noted record results driven by ten-fold year-over-year revenue growth.

Klarna reported Q1 revenue of 1.01 bn dollars up 44% y/o/y adjusted operating profit of 68 mn dollars and gross merchandise value of 33.7 bn dollars, up 33% from the prior year. The company surpassed one million merchants, added five digit new merchants during the quarter and delivered 39% US GMV growth vs 31% ex US. Fair financing GMV rose 138% to 12% of total GMV. The Klarna card reached five million users and consumer membership revenue grew nearly six fold. The firm also expanded into Google Search and Gemini via Google Pay integration. CEO Sebastian Siemiatkowski stated 1Q was a strong quarter across the board.

Figma reported Q1 EPS of $0.10 vs $0.06 estimate and revenue of $333 mn vs $316 mn expected. The company raised second quarter revenue guidance to $349 mn vs $330 mn estimate and lifted full year 2026 revenue outlook to $1.43 bn against $1.29 bn expected along with operating income guidance of $130 mn vs $105 mn. Customers exceeding $100 thousand ARR reached 1525 representing 48% y/o/y growth while net dollar retention rose to 139%, the highest level in two years. CEO noted revenue growth accelerated for the second straight quarter.

Applied Materials reported Q2 FY2026 results with revenue of $7.91 bn, up 11% y/o/y, and adjusted EPS of $2.86, both beating consensus. The company guided Q3 net sales of $8.45 bn to $9.45 bn. It expects semiconductor equipment revenue to grow more than 30% in calendar 2026. Key developments include expanded EPIC Center partnerships with TSMC, SK Hynix and Micron, new atomic-scale deposition technologies for advanced nodes, and an agreement to acquire ASMPT’s NEXX advanced packaging business. The company raised its quarterly dividend 15% to $0.53 per share and returned $765 mn to shareholders through dividends and buybacks. President and CEO Gary Dickerson stated that Applied delivered record quarterly performance.

European Stock Indices

CAC 40  +0.93%
DAX  +1.32%
FTSE 100  +0.46%

Commodities

Gold spot  -1.36% to $4,649.48 an ounce
Silver spot  -3.54% to $84.48 an ounce
West Texas Intermediate  -0.03% to $102.02 a barrel
Brent crude  -0.78% to $106.61 a barrel

Gold edged lower on Thursday as a firmer dollar weighed on the market.

Spot gold fell  -1.36% to $4,649.48 per ounce.

The US dollar rose  +0.59%, making dollar-denominated bullion more expensive for holders of other currencies.

Spot silver declined  -3.54% to $83.48 per ounce.

Oil prices declined modestly on Thursday after Iranian state media reported that roughly 30 vessels had crossed the Strait of Hormuz. However, an attack on one ship and the seizure of another continued to heighten concerns over energy supply flows amid the Iran war.

Brent crude futures settled down 84 cents, or  -0.78%, at $106.61 per barrel. The global benchmark reached an intraday high of $107.13, but remained in negative territory for most of the session. US WTI crude futures settled at $102.02, down 3 cents, or  -0.03%.

Key drivers during the session included developments in the Strait of Hormuz and the Trump - Xi talks. Although activity in the paper market has slowed, traders reported that the physical market is strengthening, supported by a meaningful increase in Asian spot buying.

President Trump said his meetings with Chinese President Xi had been going very well. The White House added that Xi had expressed interest in purchasing additional US oil to reduce China's dependence on supplies transported through the Strait of Hormuz.

The UKMTO reported that a vessel had been seized near the entrance to the Strait of Hormuz by unauthorised personnel, widely assumed to be Iranian forces. Later, the Islamic Revolutionary Guard Corps (IRGC) said that around 30 vessels had passed through the strait since Wednesday. Although statements from Iran and the IRGC are often treated with caution, tanker data and trader reports indicate that activity through the waterway has increased in recent days.

Bloomberg news reported, citing OPEC+ delegates, that OPEC-7 intends to continue increasing quotas in the coming months, with the aim of completing the return of voluntary output cuts by September.

On Thursday, Iran's semi-official Fars news agency cited a source as saying that Iran had begun allowing some Chinese vessels to transit the strait. Before that report, a Chinese supertanker carrying 2 million barrels of Iraqi crude had sailed through the waterway on Wednesday after being stranded in the Gulf for more than two months.

A Panama-flagged crude tanker managed by Japanese refiner Eneos also passed through the strait, according to ship-tracking data from LSEG on Thursday. It was the second instance of a Japan-linked oil vessel successfully making the transit.

An Indian cargo vessel transporting livestock from Africa to the United Arab Emirates sank off the coast of Oman on Thursday.

Note: As of 4 pm EDT 14 May 2026

Currencies

EUR  -0.57% to $1.1669
GBP  -0.98% to $1.3403
Bitcoin  +1.01% to $81,382.03
Ethereum  +0.53% to $2,296.98

The dollar strengthened on Thursday and was on track to record its largest weekly gain in more than two months. Rising inflation in the US is increasing expectations that the Fed will remain higher for longer. This in turn has led to a sharp rise in Treasury yields that is supportive to the dollar. It was also supported by data from the Commerce Department showing solid retail sales, up 0.5% in April from the prior month. Although this was down from March’s 1.6%, it marked the third consecutive monthly increase. In addition, unemployment is holding steady at about 4.3% and employers added a stronger-than-expected 115,000 jobs last month. Consumer spending is closely tied to the health of the labour market. The dollar has also been supported by a degree of safe haven demand due to the war in Iran. 

However, with the appointment of Kevin Warsh as new Fed Chair, there are questions around how quickly he may seek to support a "weak dollar" policy, which would be aligned with President Trump's preferences. Warsh’s proposed agenda includes a shift towards lower interest rates, justified by AI-driven productivity gains.

The dollar index rose  +0.59% to a two-week high of 98.87 against a basket of major currencies.

The euro declined  -0.57% to $1.1669.

Sterling fell  -0.98% to a one-month low of $1.3405 as the political crisis in the UK deepened following the resignation of Health Minister Wes Streeting, increasing pressure on Prime Minister Keir Starmer. Before the announcement, the currency had been trading at $1.3510.

The Japanese yen weakened  -0.49% against the US dollar to ¥158.33 per dollar.

Fixed Income

US 10-year Bond  +3.2 basis points to 4.489%
German 10-year Bund  -6.6 basis points to 3.043%
UK 10-year gilt  -11.3 basis points to 4.994%

US 10-year Treasury yields retreated from an 11-month high on Thursday as US government debt found support from lower oil prices and buying interest at key technical levels.

Yields had surged on Wednesday after data showed that US producer prices rose in April by their largest margin in four years, driven by sharply higher goods and services costs. This was the latest indication of accelerating inflation linked to the ongoing war with Iran.

Treasuries also stabilised after 10- and 30-year yields reached their highest levels since mid-2025, drawing buyers at key technical support levels.

The two-year note yield, which moves in line Fed fund rate expectations, rose  +3.2 bps to 4.030%.

The yield on US 10-year notes rose  +3.2 bps to 4.489%, after reaching 4.500% on Wednesday. At the long end of the curve, the 30-year yield increased  +0.4 bps to 5.032%.

The spread between two- and 10-year Treasury yields stood at 45.9 bps.

According to CME Group's FedWatch Tool, Fed funds futures traders are pricing 12.9 bps of rate hikes in 2026, higher than the 4.2 bps priced in a week ago. Fed funds futures traders are now pricing in a 3.2% probability of a 25 bps rate cut at June’s FOMC meeting, lower than last week’s 3.6% probability.

Germany's 10-year government bond yield fell on Thursday, but remained near its recent multi-year high, as elevated energy prices reinforced expectations of higher inflation and further ECB rate increases. 

Many European investors were away from the market on Thursday for the Ascension Day holiday.

Germany's 10-year yield fell  -6.6 bps to 3.043%, remaining close to the 3.133% level reached at the end of April, its highest level since mid-2011.

Money markets are now pricing in a nearly 90% probability of a rate increase at the 11 June meeting, with almost three hikes fully reflected by year-end. Before the conflict in Iran, investors had expected the ECB to keep its deposit rate unchanged throughout 2026. The speed and amount of rate increases expected by the ECB vs current expectations for Fed movements may, over time, contribute to the dollar debasement theme. 

Germany's two-year bond yield, which is sensitive to monetary policy expectations, fell  -6.8 bps to 2.660% on Thursday. At the longer end, the 30-year yield declined  -5.0 bps to 3.581%.

Britain's 10-year government bond yield fell  -11.3