Are we stuck in ‘higher for longer’?

What to look out for today

Companies reporting on Tuesday, 5 May: Advanced Micro Devices, Devon Energy, Duke Energy, DuPont, KKR, Live Nation Entertainment, Marathon Petroleum, Occidental Petroleum, PayPal, Pfizer, Super Micro Computer, WEC Energy Group

Key data to move markets today

EU: EcoFin Meeting and speeches by ECB’s President Christine Lagarde and Chief Economist Philip Lane

USA: S&P Global Composite PMI, ISM Services’ PMI, Prices Paid, Employment and New Orders Indexes, JOLTS Job Openings, New Home Sales, and speeches by Fed Governor Michael Barr and Vice Chair for Supervision Michelle Bowman

CHINA: RatingDog Services PMI

Global Macro Updates

Fed policymaker notes increased risks to the Fed's dual mandate. On Monday, in New York, addressing the Cynosure Group Spring Symposium, New York Fed President John Williams noted that the Fed continues to pursue its dual mandate amidst considerable uncertainty. Despite challenges posed by trade and government policy, he asserted that the US economy remains resilient.

Williams observed mixed signals in the labour market, with robust data indicating stabilisation, while survey data points to a gradual slowdown. He further indicated that inflation is expected to persist at elevated levels, largely due to increasing tariffs and higher energy prices.

He argued that current policy is well-calibrated to address risks on both sides of the dual mandate. Nevertheless, Williams highlighted that these risks have intensified, citing concerns about emerging global supply chain disruptions. He warned that ongoing conflicts could trigger broader supply shocks with more pronounced effects on inflation and overall economic activity.

Williams' remarks follow statements made on Friday by three Fed Presidents who dissented at the April meeting: Cleveland’s Beth Hammack, Minneapolis’ Neel Kashkari and Dallas’ Lorie Logan. They contended that the use of ‘additional adjustments’ language was inappropriate as it implied a distinct easing bias. Kashkari further asserted that extended conflicts might necessitate a series of rate hikes, even if such actions intensify weakness in the labour market.

Fed's latest SLOOS Results: tighter terms, unchanged demand for C&I loans. The most recent Senior Loan Officer Opinion Survey (SLOOS) by the Federal Reserve indicated that a modest net share of banks have tightened terms on commercial and industrial (C&I) loans for firms of all sizes. The underlying reasons varied: banks that tightened standards cited uncertain economic outlooks, deteriorating industry-specific conditions or reduced risk tolerance, while those easing standards pointed to increased competition from other banks and nonbank lenders.

Simultaneously, banks reported that demand for C&I loans was largely unchanged across firms of all sizes. Moderate net shares of large banks noted weakening demand from small businesses, while demand remained stable among large- and middle-market firms.

The survey also found that standards for commercial real estate (CRE) loans were generally unchanged, though responses differed by bank size. Demand for nonfarm residential and multifamily loans was largely stable, whereas demand for construction and land development loans weakened.

Regarding consumer lending, the survey revealed that standards for most residential real estate loans and home equity lines of credit (HELOCs) remained unchanged. It reported moderate net shares of banks indicating weaker demand for subprime mortgages but stronger demand for HELOCs.

US Stock Indices

Dow Jones Industrial Average -1.13%
Nasdaq 100 -0.21%
S&P 500 -0.41%, with 10 of the 11 sectors of the S&P 500 down

On Monday, heightened military tensions in the Strait of Hormuz unsettled investors, resulting in higher oil prices and a decline in stock markets.

Following record closes for both the S&P 500 and Nasdaq Composite on Friday, all major indices experienced losses on Monday. The S&P 500 fell -0.41%, with Energy being the only sector to avoid declines. The Nasdaq Composite decreased -0.19%, while the Dow Jones Industrial Average dropped -1.13%, corresponding to a loss of 557.37 points.

In corporate news, Amazon introduced a comprehensive suite of logistics services, allowing businesses to access its existing freight and distribution solutions as a bundled offering. This announcement led to a decrease in the share prices of competing delivery companies, including FedEx and UPS.

GameStop is pursuing an acquisition of eBay valued at approximately $56 billion in cash and stock.

A startup supported by General Catalyst Partners has reached an agreement to acquire Global Business Travel Group, a travel platform previously spun out of American Express, in a transaction worth approximately $6.3 billion.

S&P 500 Best performing sector

Energy +0.85%, with APA +4.71%, Diamondback Energy +2.91% and Occidental Petroleum +2.66%

S&P 500 Worst performing sector

Materials -1.57%, with Smurfit Westrock -3.70%, Vulcan Materials -3.23% and PPG Industries -3.19%

Mega Caps

Alphabet -0.93%, Amazon +1.35%, Apple -1.22%, Meta Platforms +0.27%, Microsoft -0.14%, Nvidia +0.02% and Tesla +0.43%

Information Technology

Best performer: Micron Technology +6.31%
Worst performer: Advanced Micro Devices -5.27%

Materials and Mining

Best performer: CF Industries +2.61%
Worst performer: Smurfit Westrock -3.70%

Corporate Earnings Reports

Posted on Monday, 4 May:

Vertex Pharmaceuticals quarterly revenue +7.8% to $2.987 bn vs $2.994 bn estimate

EPS at $4.47 vs $4.43 estimate

Reshma Kewalramani, CEO and President, said, “Vertex is off to a strong start in 2026, driven by leadership in cystic fibrosis; growth in sickle cell disease, beta thalassemia, and acute pain; as well as rapid pipeline progress. CASGEVY and JOURNAVX delivered more than 25 percent of our growth this quarter, underscoring the strength of the increasingly diversified revenue base. As we execute across the commercial portfolio and pipeline and build our fourth franchise in nephrology, Vertex is poised to continue to deliver for patients and create long-term value.” — see report.

ON Semiconductor quarterly revenue +4.8% to $1.513 bn vs $1.488 bn estimate

EPS at $0.64 vs $0.61 estimate

Hassane El‑Khoury, CEO and President, said, “We exceeded expectations as demand strengthened through the quarter and we have moved beyond the cyclical trough on a path to recovery. Our AI data center business accelerated, growing more than 30% sequentially. Looking ahead, we are encouraged by the underlying health of the business and the long‑term opportunities driven by increasing semiconductor content in automotive, industrial and AI data center applications.” — see report.

Diamondback Energy quarterly revenue +4.8% to $4.240 bn vs $3.988 bn estimate

EPS at $4.23 vs $3.74 estimate

Kaes Van't Hof, CEO and Director, said, “We delivered a strong first quarter, driven by solid execution despite weather-related impacts from Winter Storm Fern in January. Oil production averaged 521 MBO/d, exceeding the high end of our 502 - 512 MBO/d guidance range. Importantly, this beat was not a result of higher cash capital expenditures as we invested $933 million for the quarter, below the midpoint of our $900 - $975 million guidance range.” — see report.

Posted on Monday, 4 May from The Pulse, our real-time AI-driven news tool. Available exclusively on the EXANTE Web Platform

Palantir reported Q1 revenue of $1.63 bn, beating estimates of $1.54 bn and up 85% y/o/y. Adjusted EPS was $0.33 versus $0.28 consensus. US commercial revenue hit $595 mn, up 133% y/o/y. The company raised FY26 revenue guidance to $7.65 bn - $7.66 bn from prior $7.18 bn -v$7.20 bn, implying 71% growth, and increased US commercial forecast to $3.22 bn. CEO Alex Karp noted the firm generated a record $1.6 bn in Q1 revenue, nearly doubling the business in 12 months.

Pinterest reported quarterly earnings with EPS of $0.27 beating Wall Street consensus of $0.22, and revenue of $1 bn exceeding estimates of $968 mn. CEO stated, "We delivered a record $4.2 bn in revenue in 2025, up 16% y/o/y, and reached 619 mn MAUs, up 12%. Users are at all-time highs and overall engagement continues to grow." The company posted strong guidance.

Tyson Foods reported Q2 2026 earnings with adjusted EPS of 87 cents beating Wall Street consensus of 79 cents and revenue of $13.65 bn versus $13.58 bn expected. The company issued FY guidance for adjusted operating income of $2.2 bn to $2.4 bn, sales growth of 2% to 4%, net interest expenses around $365 million, and CAPEX of $700 mn to $800 mn.

Duolingo reported Q1 revenue of $292 mn beating estimates of $289 mn, EPS of $0.89 vs $0.75 expected, EBITDA of $83 mn vs $74 mn, paid subscribers of 12.5 mn vs 12.7 mn est., and DAUs of 56.5 mn vs 55.7 mn est. FY26 guidance set bookings at $1.28 bn vs $1.29 bn est. and EBITDA at $310 mn vs $302 mn est. CEO stated execution on strategy with results in line with expectations early in strategic shift.

European Stock Indices

CAC 40 -1.71%
DAX -1.24%
FTSE 100 -0.14%

Commodities

Gold spot -2.07% to $4,517.94 an ounce
Silver spot -3.48% to $72.72 an ounce
West Texas Intermediate +2.58% to $105.14 a barrel
Brent crude +4.59% to $113.84 a barrel

On Monday, gold prices experienced a decline of over two percent due to US dollar strengthening, rising Treasury yields and reduced expectations for immediate interest rate cuts as rising oil prices increased worries about inflationary impacts and the willingness of central banks to cut rates.

Spot gold decreased by -2.07%, closing at $4,517.94 per ounce.

The US dollar strengthened, with the dollar index rising +0.27% to 98.47. The appreciation of the dollar renders dollar-denominated metals more expensive for investors using other currencies.

Spot silver also declined, falling -3.48% to $72.72 per ounce.

Both WTI and Brent crude prices closed higher, driven by signs of the disintegration of the US-Iran ceasefire. On Monday, President Trump said the US would begin guiding ships through the strait. In response, Iran said it would attack vessels approaching the vital waterway. Brent crude futures for June settled at $113.84 per barrel, marking an increase of $5.00 or +4.59%. US WTI futures for June rose by $2.64, or +2.58%, to $105.14 per barrel.

Earlier today, the United Arab Emirates (UAE) deployed air defences to intercept missiles over its territory, with at least six separate attacks reported. Some missiles struck oil tanks and triggered fires at the Fujairah industrial zone. The UAE issued a statement reserving the right to respond to these unprovoked attacks, while Iran cautioned that all interests in the UAE could be targeted should the UAE ‘take unwise action.’

Over the past day, at least three commercial vessels in or near the Strait of Hormuz (SoH) were targeted. US Central Command reported that American forces destroyed six smaller Iranian boats and intercepted several cruise missiles and drones launched by Iran, aiming to disrupt the US initiative to assist ships stranded in the SoH. Admiral Brad Cooper, the head of Central Command, declined to comment on whether today's events marked the end of the ceasefire. The US President stated that Tehran has demonstrated increased flexibility in negotiations, but warned that Iran would face severe consequences if US ships were attacked.

During the weekend, OPEC-7 announced an additional quota increase effective in June, which appears to be largely symbolic. According to Kpler data, Russian crude floating storage levels are nearly depleted.

To offset supply disruptions, Kazakhstan's crude and condensate output for April rose by 300,000 barrels per day (bpd) to 2.17 million bpd. Brazil set a new monthly production record in March, reaching 4.247 million bpd, a 4.6% increase compared to the previous month. Libya's oil production has climbed to its highest level since at least 2013 at 1.4 million bpd, as reported by the Financial Times. Additionally, Venezuela's oil exports reached an eight-year high last month, totalling 1.23 million bpd.

Looking ahead, Aramco's official selling prices (OSP) for June are expected to be released by midday today, and the Department of Energy's Weekly Petroleum Status Report (WPSR) is scheduled for Wednesday. The DOE announced today that 5.2 million barrels were released from the Strategic Petroleum Reserve (SPR) last week.

Note: As of 4 pm EDT 4 May 2026

Currencies

EUR -0.29% to $1.1686
GBP -0.33% to $1.3527
Bitcoin +2.64% to $80,253.89
Ethereum +3.00% to $2,360.71

On Monday the dollar index rose +0.27% to 98.47, while the euro declined -0.29% to $1.1686.

The dollar ended the trading session up +0.08% to ¥157.15. Earlier in the session the Japanese currency had surged as much as +0.75% to ¥155.69.

Officials from Japan’s Ministry of Finance did not immediately comment on Monday’s movements, but market participants remain vigilant for possible actions from authorities, especially after suspected intervention last week aimed at supporting the weakened yen.

Although Tokyo officials have not confirmed whether intervention occurred last week, sources reportedly told Reuters that authorities purchased yen for the first time in two years. Money market data from Friday indicate Tokyo may have spent approximately ¥5.48 trillion (approximately $35 billion) acquiring the currency.

The British pound declined -0.33% to $1.3527. British financial markets were closed on Monday in observance of the early May Bank holiday.

Fixed Income

US 10-year Bond +6.3 basis points to 4.442%
German 10-year Bund +5.1 basis points to 3.092%
UK markets were closed in observance of the bank holiday

US Treasury yields increased across the curve on Monday as threats of the ceasefire between the US and Iran disintegrating led oil prices to rise, fuelling concerns about inflation and a reassessment of Federal Reserve interest rate policy

The yield on the US 10-year Treasury note advanced +6.3 bps to 4.442%, marking its largest single-day rise since 26 March.

At the long-end of the curve, the yield on the 30-year Treasury bond also rose, gaining +5.3 bps to reach 5.017% after touching 5.036%, its highest level since 17 July. The two-year US Treasury yield, sensitive to the Fed fund rate expectations, advanced +7.0 bps to 3.962%.

According to CME Group's FedWatch Tool, Fed funds futures traders are pricing in 7.2 bps of rate hikes in 2026, compared to 8.8 bps of rate cuts priced in a week ago. Fed funds futures traders are now pricing in a 4.8% probability of a 25 bps rate cut at the June FOMC meeting, down from 5.6% a week ago.

Rising Treasury borrowing estimates and steady auction sizes draw attention. The US Treasury has announced that it expects to borrow $189 billion in Q2, an increase from the $109 billion projected in February. This adjustment is attributed to lower anticipated net cash flows, partially balanced by a higher cash balance at the start of the quarter. The forecast assumes an end-of-June cash balance of $900 billion. For the Q3, Treasury anticipates borrowing $671 billion, with an assumed end-of-June cash balance of $950 billion.

Market participants are now turning their attention to Wednesday’s 8:30 am EDT release, which will provide details on the Treasury’s quarterly refunding operations. Consensus expectations continue to point toward no changes in auction sizes this quarter, maintaining a total issuance of $125 billion, comprising $58 billion in three-year notes, $42 billion in ten-year notes and $25 billion in thirty-year bonds.

There is heightened interest in any updates to Treasury guidance. Over recent quarters, the Treasury has reaffirmed its intention to keep coupon sizes unchanged ‘for at least the next several quarters.’ Analysts widely anticipate that rising federal deficits will necessitate an increase by February 2027 or later, and are closely monitoring for any changes in the language of the statement.

It is broadly anticipated that the Treasury will keep auction sizes for notes and bonds unchanged for the ninth consecutive quarter. Nevertheless, the possibility of substantial tariff refunds has increased scrutiny regarding if, and when, the government might expand issuance of longer-dated debt. Up to $166 billion may be returned to importers.

On Monday, eurozone borrowing costs across the maturity spectrum increased as investors remained cautious about the possibility that the ECB might soon raise interest rates to address persistent inflation. 

Trading activity was subdued due to the closure of UK markets for a public holiday.

Germany's 10-year Bund yield rose +5.1 bps to 3.092%, while the two-year, rate-sensitive Schatz yield climbed +8.2 bps to 2.732%.

Italy’s 10-year BTP yield climbed +7.7 bps to 3.933%, maintaining the spread over 10-year Bunds at 84.1 bps.

Money markets are currently pricing in an approximately 85% probability of a 0.25 bps rate increase at the ECB's June meeting, with expectations for three such hikes in total this year.

ECB policymakers indicated last Friday that monetary policy may need to be tightened as early as June, citing a worsening inflation outlook and growing risks of entrenched price growth.

During discussions last Thursday, the central bank considered raising rates and signalled, both publicly and privately, that higher rates remain on the table, due to concerns that an energy-driven inflation spike could have lasting effects beyond a temporary shock.

Nevertheless, new tariff threats targeting European automakers are expected to negatively impact risk sentiment and growth prospects, potentially complicating the ECB's policy decisions for June.

The US President announced on Friday his intent to raise tariffs on cars and trucks from the EU to 25% this week, up from the previously agreed 15%, citing the bloc’s failure to comply with its trade agreement with Washington.

On Monday, Bank of France Governor Francois Villeroy de Galhau projected that the inflation rate would return to 2.0% between 2027 and 2028, following this year’s surge caused by higher energy prices.

Slovak policymaker Peter Kazimir stated that an ECB rate hike in June appears virtually certain.

Note: As of 4 pm EDT 4 May 2026

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