Ugly, Tailing 30Y Auction Makes History With First 5%+ Yield Since The Great Quant Crash Of Aug 2007

Moments ago, the last refunding auction of the week, the sale of $25BN in 30Y paper, made history: it was the first 30Y auction to print with a high yield above 5%, and a coupon of 5%, since August 2007... which as veteran traders will recall was the month of the historic quant crash which marked the S&P highs at the time and eventually culminated in the global financial crisis. 

The auction priced at a high yield of 5.046%, up sharply from 4.876% in April, and tailed the 5.041% When Issued by 0.5bps, the second consecutive tail following 4 stop-throughs. 

But, as noted above, what is more notable was that this was the first 5% interest rate coupon 30Y auction, and the the first 30Y auction with a high yield above 5% since... August 2007 when surging rates sparked a quant crash. Come to think of it, unlike retail momentum chasers, quants have had a terrible month. How much longer can they last? But we digress... 

Going back to the auction, the uglyness was all around: the bid to cover was 2.303, down from 2.385, below the 2.43 six auction average and the lowest since Nob 2025.

Internals were not quite as bad, with Indirects taking down 66.6%, up from 64.1% in April and just below the 66.8% recent average. And with Directs awarded 21.74%, Dealers were left with 11.7%. 

Overall, this was an ugly, tailing auction, but the question on everyone's lips is whether today's quction will - like in August 2007 - be the VaR shock equivalent of a bond auction that pops this particular bubble. For the answer keep a close eye on quants who are suffering badly. 

Tyler Durden Wed, 05/13/2026 - 13:35

Imminent Supreme Court Rulings To Watch For

Authored by Sam Dorman via The Epoch Times (emphasis ours),

Birthright citizenship, girls sports, the definition of Election Day, and other hot-button topics are on the line in upcoming Supreme Court decisions.

Illustration by The Epoch Times, Madalina Kilroy/The Epoch Times

The court’s 2025–2026 term is expected to end in June with a series of rulings that could impact social issues and President Donald Trump’s agenda.

The last scheduled oral argument was held on April 29; the justices considered whether Trump wrongfully terminated deportation protections for thousands of Haitian and Syrian nationals. That decision and a ruling on Trump’s order restricting birthright citizenship could influence immigration policy for decades to come.

So far, the court has already issued opinions on Trump’s tariffs and redistricting. Its remaining decisions could change how elections are conducted, as well as alter the balance of power between Congress and the president.

Here are the main decisions expected before the end of June.

Birthright Citizenship

A key part of Trump’s immigration agenda has been his attempt to limit who receives American citizenship. The 14th Amendment states that “all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

Historically, the executive branch interpreted this amendment to grant citizenship to babies born to illegal immigrants. Trump changed this interpretation on his first day in office, passing an executive order stating that the amendment only applied to children who had at least one parent with citizenship or lawful permanent residency.

In Trump v. Barbara, the president asked the Supreme Court to intervene after a federal judge blocked his executive order. During oral argument on April 1, the Justice Department said that parents should be legal residents or have some kind of allegiance to the United States before their children receive citizenship. The justices, however, seemed skeptical and indicated they may view citizenship more broadly.

Migrants, including a pregnant Haitian woman seeking to give birth in the United States, are apprehended by a U.S. Border Patrol agent in Yuma, Ariz., on Dec. 7, 2021. The Supreme Court is expected to rule on the constitutionality of a Trump executive order aimed at restricting birthright citizenship before the end of June. John Moore/Getty Images Girls Sports

Another highly anticipated decision focuses on Idaho’s and West Virginia’s laws preventing males from participating in girls and women’s sports. Federal appeals courts blocked those laws, stating that they conflict with another portion of the 14th Amendment known as the equal protection clause. That clause generally prohibits laws that classify or discriminate on the basis of certain characteristics.

The appeals courts said the state laws conflict with that clause because they classify individuals on the basis of their sex and “transgender status.” The U.S. Court of Appeals for the Fourth Circuit also said West Virginia’s law violated Title IX of the Civil Rights Act. That law prohibits sex-based discrimination in federally funded education.

The justices heard oral argument in January for the cases, known as Little v. Hecox and West Virginia v. B.P.J. Overall, the justices seemed inclined to uphold the states’ laws.

People take part in a rally outside the U.S. Supreme Court as justices hear arguments in two cases in which states have banned males from participating in female-only sports in Washington on Jan. 13, 2025. Madalina Kilroy/The Epoch Times Monsanto’s Weedkiller

Monsanto’s herbicide, known as Roundup, has cost the company millions of dollars following lawsuits alleging one of its ingredients, glyphosate, increases cancer risk.

One of those lawsuits made it to the Supreme Court in April and could determine how much Monsanto has to pay in future lawsuits. The case, Monsanto v. Durnell, focused on a Missouri jury that held the company liable for not warning about glyphosate’s purported risks.

Monsanto told the Supreme Court that the jury’s verdict was based on a faulty interpretation of the law. The jury said Monsanto was liable under a Missouri law that requires warnings for consumer products. Monsanto argued that the jury interpreted the law in a way that conflicted with another law passed at the federal level.

The Supreme Court’s eventual decision is expected to touch on a legal doctrine known as preemption, which says that federal law takes precedence over state law when there is a conflict between the two. In this case, Monsanto said the Federal Insecticide, Fungicide, and Rodenticide Act should take precedence.

“The People vs. the Poison” protesters rallied to protest Bayer/Monsanto regarding cancer-linked risks from the Roundup weedkiller outside the U.S. Supreme Court in Washington on April 27, 2026. Tasos Katopodis/Getty Images

That law gives the U.S. Environmental Protection Agency authority to regulate chemicals such as glyphosate. Because the agency already approved glyphosate’s use and didn’t require additional warnings, Monsanto said Missouri couldn’t require more either. Durnell argued that the verdict didn’t conflict with federal law and that Missouri should be able to protect its citizens’ health.

Trump’s Ability to Fire Bureaucrats

One of the main legal complaints leveled during Trump’s second administration was that he fired high-level bureaucrats without good reason. Leaders of so-called “independent” agencies, such as the Federal Trade Commission (FTC), sued, alleging that Trump didn’t show the type of cause federal law required of presidents when firing officials.

In Trump v. Slaughter, Trump asked the Supreme Court to intervene after a lower court blocked his attempt to fire FTC Commissioner Rebecca Slaughter. The justices seemed inclined in December 2025 to not just allow her firing, but also expand the authority presidents have in removing bureaucrats like her.

Their eventual decision could overturn a 90-year-old precedent from Humphrey’s Executor v. United States. In that 1935 case, the Supreme Court held that former President Franklin D. Roosevelt wrongly fired a former FTC commissioner and that Congress could restrict his ability to do so.

The Trump administration argues that the Constitution gives the president greater authority and that Congress cannot use laws such as the FTC Act to restrict his ability to remove bureaucrats.

Then-Federal Trade Commissioner Rebecca Slaughter participates in a privacy roundtable at CES 2020 at the Las Vegas Convention Center in Las Vegas on Jan. 7, 2020. David Becker/Getty Images Fed Independence

Like the FTC Act, another law, known as the Federal Reserve Act, said presidents couldn’t remove high-level officials without cause. That was the law that Federal Reserve Governor Lisa Cook cited when she challenged Trump’s attempt to fire her last year.

Trump removed Cook while citing allegations that she committed mortgage fraud, something she has denied. During oral argument in January, the Supreme Court wrestled with multiple questions: whether Trump gave Cook enough due process before firing her, how the firing would impact the economy, and how Trump’s view of his authority would impact the Federal Reserve’s independence.

Overall, the justices seemed inclined to side with Cook. The case, Trump v. Cook, followed other decisions in which the Supreme Court suggested that the Federal Reserve was more independent than agencies such as the FTC and that its members therefore deserved additional protections.

Federal Reserve Board Governor Lisa Cook (R) arrives for a board meeting at the Federal Reserve building in Washington on March 19, 2026. Kevin Dietsch/Getty Images Definition of ‘Election Day’

The 2020 presidential election reinvigorated debate over mail-in ballots, a controversial method of voting that Trump and others argue is vulnerable to fraud. Multiple states, including Mississippi, have allowed mail-in ballots to be counted after Election Day as long as they are postmarked on or before that day.

Trump and the Republican National Committee argue that practice violates a federal law that defines Election Day as “the Tuesday next after the first Monday in November.”

When the case, Watson v. Republican National Committee, reached the Supreme Court, the Trump administration supported the committee’s position.

“‘Election day’ was the day all voting needed to be completed; and the act of voting was not complete until a ballot had been officially received,” the Justice Department told the court.

Mississippi argues the law simply requires that voters make their choice by Election Day, not that their ballots are counted.

Election officials count absentee ballots at a polling place located in the Town of Beloit fire station near Beloit, Wis., on Nov. 3, 2020. Scott Olson/Getty Images

During oral argument in March, the justices seemed more likely to side with the committee. “We’re moving in this direction,” Justice Samuel Alito said. “We don’t have Election Day anymore. We have election month or we have election months.”

Deportation Protections

The court’s most recent oral argument focused on the Department of Homeland Security’s termination of deportation protections for thousands of Haitians and Syrians. “Temporary protected status” prevents nationals of certain countries from being removed if conditions in their home countries would make returning unsafe.

Under President Barack Obama, the department granted that status for Haiti, which was impacted by the 2010 earthquake, and Syria, which has seen ongoing political turmoil and armed conflict.

Former Homeland Security Secretary Kristi Noem terminated those protections last year, prompting lawsuits and federal judges’ orders blocking those terminations.

The justices heard oral argument in the cases, known as Mullin v. Doe and Trump v. Miot, on April 29. They considered whether those judges exceeded their authority under the Immigration and Nationality Act, which generally prohibits judicial review of the department’s determinations about temporary protected status.

Guerline Jozef, co-founder and Executive Director of Haitian Bridge Alliance, speaks in front of the U.S. Supreme Court in Washington on March 16, 2026. The Court agreed on March 16 to consider the Trump administration’s bid to strip Haitians and Syrians of temporary deportation protections. The Department of Homeland Security has announced plans to end so-called Temporary Protected Status for some 350,000 Haitians and 6,000 Syrians. Roberto Schmidt/AFP via Getty Images

Lower court judges, however, said the administration still had to follow certain procedures, but that it didn’t when it terminated those protections. The justices also considered a federal judge’s argument that the administration likely acted with racial animus toward Haitians and therefore violated the Constitution.

Campaign Finance

How much protection does the First Amendment afford political parties when they spend money on campaigns? That’s one of the questions the Supreme Court is expected to address in a case called National Republican Senatorial Committee v. Federal Election Committee.

The case originated with a lawsuit brought by then-Senate candidate JD Vance, who argued that Congress violated the First Amendment with the Federal Election Campaign Act. That law restricts how much political parties and candidates’ campaigns can coordinate their spending.

The Supreme Court upheld that restriction in 2001 on the basis that coordination opened a backdoor for corruption. In its upcoming decision, the court could maintain its prior position or overrule itself while siding with Republicans.

Read the rest here...

Tyler Durden Wed, 05/13/2026 - 13:35

Up To $170 Billion Needed To Secure Full Domestic Nuclear Fuel Supply Chain

To support current commercial nuclear operations, plus 300 GW of new nuclear capacity for a total of roughly 400 GW by 2050, all fueled domestically, the country would need to invest between $105 billion and $170 billion across the entire nuclear fuel cycle.

Is it still called a bottleneck if the entire industry is the problem? 

The consulting firm McKinsey & Company used the most aspirational scenario from the Trump administration’s May 2025 executive orders as its benchmark for their recent report. That means rebuilding capacity from mining and milling through conversion, enrichment, fabrication, and even reprocessing.

It's looking more and more like the $2.7 billion award from the DOE for domestic enrichment barely scratches the surface:

• $15-20 billion for mining and milling
• $30-45 billion for conversion
• $30-40 billion for enrichment
• $10-20 billion for fabrication
• $20-45 billion for reprocessing

These figures assume a mix of new and existing reactors, including Gen IV designs that will demand high-assay low-enriched uranium (HALEU).

We have documented the vulnerabilities for months. Today the United States imports about 99 percent of the raw uranium ore needed for its commercial fleet… 

With milling capacity effectively nonexistent and conversion limited to a single operating facility… 

And enrichment capacity covers only about one-third of domestic needs…

The gaps leave utilities exposed to geopolitical risks and price volatility, a point we highlighted when uranium spot prices pulled back earlier this year even as long-term supply deficits widened…

Uranium: the next gold pic.twitter.com/2SSjvRkdSg

— zerohedge (@zerohedge) December 12, 2025

Progress is

Uranium: the next gold pic.twitter.com/2SSjvRkdSg

— zerohedge (@zerohedge) December 12, 2025 ">accelerating, however. We reported on the DOE’s Nuclear Fuel Cycle Defense Production Act Consortium, which has met repeatedly to map out a seven-year “Nuclear Dominance – 3 by 33” plan covering every link from mining to reprocessing. 

DOE has also awarded nearly $3 billion for enrichment projects, including $900 million each to Centrus Energy and General Matter, while the Export-Import Bank has backed up to $4.2 billion in additional financing. Centrus recently committed $560 million to scale centrifuge manufacturing in Oak Ridge, and we covered its joint-venture discussions with Oklo for HALEU deconversion services.

The private sector is also making progress on their own, not wanting to wait for the government to sort itself out and attempt to take market share while it's up for grabs. 

Uranium Energy Corp is expanding ISR mining and advancing conversion licensing. New entrants like FluxPoint Energy and LIS Technologies are targeting conversion and next-generation laser enrichment facilities, aiming for commercial operations before 2030. 

We also noted Goldman Sachs’ updates showing persistent supply-demand mismatches that continue to support higher uranium prices over the coming decades.

McKinsey stresses that capital alone will not suffice. Permitting reform, infrastructure build-out, workforce development, and advanced technologies will prove critical to compressing the long lead times inherent in fuel-cycle projects. The firm acknowledges 100% domestic sourcing will prove challenging, yet the analysis underscores that options exist if stakeholders maintain focus.
 

Tyler Durden Wed, 05/13/2026 - 13:00

B200s Or B-2s?

By Bas van Geffen, senior macro strategist of Rabobank

Concerns about the Middle East continued to dictate markets yesterday. The Strait of Hormuz remains closed, and there were no signs that this will change soon. Oil prices rose further. Dated Brent jumped 5% on the day to top $111.

Alongside the rise in benchmark energy prices, yields increased too. 10y US Treasury yields closed around 5bp higher, and 10y German Bund yields rose 6bp to 3.1%, dragging broader EUR yields up. Equities struggled. European bourses closed around 1.5% lower, but the S&P pared most of its losses after the European close, so the Euro Stoxx index may catch up to its US counterpart today.

This reversal happened after oil prices came off their intraday highs, and as news broke that Nvidia CEO Huang will join the US delegation to China. President Trump indicated that he wants to focus on economic issues during his summit with President Xi, more so than on geopolitical issues in the Middle East. Markets certainly seem hopeful that Trump and Xi will discuss B200 chips rather than B-2 bombers.

Of course, the Iran war complicates negotiations between the two leaders. China agrees to oppose any toll scheme for safe passage through the Strait of Hormuz, according to the US State Department. Meanwhile, Iraq and Pakistan have reportedly made deals with Iran to safeguard oil and LNG shipments from the Gulf – underscoring that Iran is able to effectively control the flow of energy through the Strait of Hormuz. China has also further diversified its oil imports. This may make China more resilient to prolonged disruptions in Hormuz, while it also cuts off more potential income for Iran.

But China will probably want something in return. President Trump will reportedly discuss US weapons sales to Taiwan with Xi, breaking with a decades-long US tradition. US allies in Asia are alarmed that Trump may agree to Xi’s request to delay or stop deliveries. That’s a longer-term geopolitical risk, but markets may shrug off any such potential concessions if the US and China report progress on economic issues.

And any optimism from the Trump-Xi summit may be overshadowed by developments in the Middle East. It’s unlikely that tensions will flare up again during the summit, but that’s only two days of respite. On his way to China, President Trump told reporters that stopping Iran’s nuclear programme outweighs Americans’ economic pain. The US presidents’ comments add to concerns that tensions in the Middle East may flare up again after the summit.

Adding further unease about the US’ next steps in the Middle East, the Wall Street Journal reports that the US president spoke with his U.A.E. counterpart to discuss “mutual interests.” This news follows on the WSJ’ report that the United Arab Emirates had secretly carried out military strikes in Iran.

Elsewhere, gilt yields’ rollercoaster ride continues, as domestic politics stack on top of geopolitical risks. Even the BBC is talking about intraday moves in gilts now, which is never a sign that things are going well. Pressure on a defiant PM Starmer is building. Several ministers resigned from their posts yesterday, after dozens of MPs had already called on Starmer to resign. Today, the 11 unions that support the Labour party are expected to issue a joint statement that calls for a roadmap to a new party leader into the next general elections.

Uncertainty about the UK’s leadership continues to weigh on both UK sovereign yields and the currency.

Tyler Durden Wed, 05/13/2026 - 12:45

Qatar Asks Vessels At Key LNG Port To Go Dark for Safety

Submitted by Charles Kennedy of OilPrice.com

Qatar has requested LNG vessels near its Ras Laffan LNG port to switch off their transponders as part of safety measures at the key export port of the world’s second-largest LNG exporter before the war, anonymous sources with knowledge of the plan told Bloomberg on Tuesday.  

The de facto closure of the Strait of Hormuz has trapped about 20% of daily global LNG flows, mostly those previously shipping out of Qatar and part of the UAE’s LNG flows. 

In addition, Iranian drone and missile strikes on energy infrastructure in the region has damaged Qatar’s key LNG liquefaction complex Ras Laffan, the world’s single largest such facility. Due to the attacks, QatarEnergy has been forced to declare force majeure for up to five years on some long-term LNG contracts and has advised that full capacity could take up to five years to restore following extensive damage from the strikes. 

The waters around Qatar have seen increased security threats since the war began on February 28. After more than two months of total blockage of Qatari shipments out of the Strait of Hormuz, the major Gulf LNG exporter is now apparently seeking to avoid being targeted. 

At least nine LNG tankers that were anchored near Qatar stopped sending signals via their Automatic Identification System from May 11, vessel-tracking data compiled by Bloomberg showed, in a sign that Qatar may have indeed asked ships to go dark to avoid being targeted. 

A tanker laden with LNG from Qatar successfully passed the Strait of Hormuz this weekend, the first such transit since February 28.

Crude tankers have also successfully exited the Strait in recent days, after going dark, according to shipping data cited by Reuters. 

“Commercial shipping and maritime security activity around the Strait of Hormuz are increasingly shifting into dark or emissions-controlled conditions,” maritime intelligence firm Windward said on Monday.  

Tyler Durden Wed, 05/13/2026 - 12:30

Goldman Flags Troubling Mortgage Delinquency Rise Across This U.S. Region

Mortgage delinquencies fell slightly in March, with the first-lien delinquency rate declining to 3.35%, down 37 basis points from February, as seasonal factors and tax refunds supported borrowers.

The real estate and mortgage industry outlet HousingWire cited Intercontinental Exchange’s May 2026 Mortgage Monitor report, which showed that while the overall mortgage delinquency rate fell in March, there was still concern over serious delinquencies and foreclosures, which are up by 154,000 borrowers from one year ago.

The increase was driven mostly by FHA loans, which rose by 164,000 and now account for a record 55% of seriously past-due mortgages. Overall, 1.6% of active mortgages are seriously delinquent, up 20% year over year.

A lot of questions here...

During the Biden administration, H-1B visa holders were buying houses with 97-100% financing. 97% would come from the FHA, with the rest coming from state first-time home buyer programs.

Zero money down. Thanks to programs that were supposed to be helping low-income American… https://t.co/0ZaLGV0Wru pic.twitter.com/WvlRjgYeJV

— Robert Sterling (@RobertMSterling) May 13, 2026

Adding to the mortgage delinquency story is Goldman analyst Jason Acosta, who released a note earlier today, showing what he described to clients as the "chart of the day."

The chart indicates that mortgage past-due rates are highest across parts of the Deep South, with Mississippi and Louisiana as the worst-performing states, followed by elevated stress in Alabama, Texas, Indiana, Georgia, West Virginia, Oklahoma, Maryland, Pennsylvania, and others.

"On a national level, mortgage delinquencies eased in March, yet higher-severity stress remained elevated even amid the strongest monthly gain in U.S. home prices in two years," Acosta said.

He added, "We just released a new widget looking at past-due rates on a state-by-state basis below, with updates incoming to select between ranges of 30-59 days, 60-89 days, and 90 days+."

Here is the chart: What is the mortgage past-due rate by state?

Latest on the housing market:

• Housing Market's Crucial "Spring Selling Season" Is In Tatters

The read we have here is that mortgage distress is becoming increasingly concentrated in lower-income Southern states, even as the national delinquency rate improved modestly overall.

Tyler Durden Wed, 05/13/2026 - 12:15

Treasury Department Alerts US Banks To Suspected Iranian Money Laundering Efforts

Authored by Victoria Friedman via The Epoch Times (emphasis ours),

The U.S. Treasury Department’s Financial Crimes ​Enforcement Network (FinCEN) on May 11 issued an alert to financial institutions warning them of efforts by ​the Iranian Islamic Revolutionary Guard Corps (IRGC) to evade sanctions.

The U.S. Department of the Treasury in Washington on June 30, 2025.Madalina Kilroy/The Epoch Times

FinCEN said in a statement that the IRGC has been facilitating and laundering the proceeds of illicit oil sales using networks of financial facilitators and shell companies. The alert provides red flags on the IRGC’s oil smuggling, digital assets, and front-company abuse to aid financial institutions in detecting and reporting suspicious activity, the statement said.

Treasury Secretary Scott Bessent said that financial institutions have a responsibility to stop this activity.

“Degraded by Economic Fury, the Iranian military is desperately trying to fund its weapons programs and terrorist proxies,” Bessent said.

“Treasury will continue to deny the Islamic Revolutionary Guard Corps access to the financial networks it exploits to fund its terrorist acts. Financial institutions should be on notice that they have a responsibility to detect suspicious activity and stop it in its tracks.”

The Treasury network describes the IRGC as a parallel organization to Tehran’s regular armed forces, which reports directly to the leader, Ayatollah Mojtaba Khamenei. The IRGC is a U.S.-designated foreign terrorist organization.

Shadow Banking

FinCEN says the IRGC can make money from oil sales by misrepresenting its commercial activities. It smuggles oil using a “shadow fleet” of vessels that operate outside normal maritime rules and are often owned and operated by companies outside Iran.

Proceeds are then laundered through “shadow banking” networks to sell their oil and commodities abroad.

“By using front company accounts outside Iran to receive and remit payments, sanctioned entities like the IRGC are able to conduct transactions through the international financial system without repatriating funds to Iran,” FinCEN said.

The network says that with these proceeds, Iran can fund the procurement and development of weapons, as well as fund terrorist activity abroad.

Sanctions on Iran

The alert comes after President Donald Trump said on May 11 that a ceasefire with Iran was on “life support.”

The president’s remarks follow Tehran’s proposal to end the war over the weekend.

“I would call it the weakest right now after reading that piece of garbage they sent us,” Trump told reporters at the White House. “I didn’t even finish reading it.”

A ceasefire between the United States and Iran went into effect in April, ending weeks of U.S. and Israeli strikes on the country that started on Feb. 28.

The Strait of Hormuz, a key transit point for oil and natural gas, has remained effectively closed in the meantime, sending oil prices surging and rattling stock markets worldwide.

In the meantime, the U.S. military has imposed a naval blockade on Iranian ports. The U.S. Central Command (CENTCOM) said on May 11 that 62 commercial ships have been redirected and four ships disabled as it enforced the blockade.

Also on Monday, the U.S. Treasury Department announced sanctions against 12 new targets as part of its “Economic Fury” initiative to disrupt Tehran’s economic and military capacity.

The Treasury said it had designated 12 individuals and entities for their roles in enabling the IRGC’s sale and shipment of Iranian oil to China.

“The IRGC relies on front companies in permissive economic jurisdictions to obfuscate its role in oil sales and funnel the revenue to the Iranian regime. Instead of using this revenue to support the struggling Iranian people, the regime directs it toward weapons development, backing terrorist proxies, and funding security forces that suppress citizens’ freedoms,” the Treasury said.

Joseph Lord and Jack Phillips contributed to this report.

Tyler Durden Wed, 05/13/2026 - 12:00

IEA Revises 2026 Forecast: Global Oil Supply To Plunge Below Demand This Year

Global oil demand is set to exceed supply in the current year amid the ongoing conflict in the Middle East, reversing previous projections of a surplus, OilPrice reports citing the latest IEA data.

"With Hormuz tanker traffic still restricted, cumulative supply ​losses from Middle East Gulf producers already exceed 1 billion barrels with more than 14 million (barrels per ⁠day) of oil now shut in, an unprecedented supply shock," said the agency, which advises industrialized countries.

According to the May 2026 Oil Market Report by the International Energy Agency (IEA), global oil supply is projected to fall by 3.9 million bpd across 2026, with ~10.5 million bpd of Gulf oil production currently offline.

Global oil stocks are depleting at a record pace as supply losses from disruptions to flows via the Strait of Hormuz keep mounting

Producers & consumers are responding to the market signals, with Atlantic crude oil exports surging & refiners cutting runs: https://t.co/cOYraM4phx pic.twitter.com/QWJlPICebi

— International Energy Agency (@IEA) May 13, 2026

Consumption is also under pressure due to the war as ​price spikes lead ⁠to demand destruction and slower economic growth: Global demand is also forecast to contract by 420,000 bpd compared to a ​previous forecast of an 80,000 bpd drop due to surging prices, slow economic growth and widespread flight cancellations, with oil demand still set to outpace supply by 1.78 million bpd in the current year.

"Our latest supply and demand estimates imply that the market will remain severely undersupplied through the end of 3Q26, even assuming the conflict ends by early June," the Paris-based agency said, adding that the second-quarter deficit will be as stark as ​6 million bpd.

Global crude runs are expected to plunge by 1.6 million bpd to an average of 82.3 mb/d for the year as operators face infrastructure damage and severe feedstock shortages, with refinery throughput expected to fall by 4.5 million bpd in the second quarter alone.

Operators in the Middle East and Asia are battling significant damage to energy infrastructure and reduced availability of crude feedstocks, largely stemming from the closure of the Strait of Hormuz. The heaviest cuts have been in the Middle East and Asia-Pacific, heavily impacting naphtha, LPG and jet fuel production.

According to the IEA, global oil inventories are projected to fall by an average of 8.5 mb/d during the second quarter of 2026, with the drawdown largely due to a decline in crude output from countries including Iraq, Saudi Arabia, Kuwait and the UAE.

The steepest inventory draws are projected to occur in May and June, helping to keep Brent crude prices elevated at ~$106 per barrel.

Whereas the release of a total of 400 million barrels by 32 IEA members is expected to provide a temporary buffer, the market will still face a significant deficit that could keep prices high through the year.

Tyler Durden Wed, 05/13/2026 - 11:00

'Obvious Dangers': Gabbard Probing US Funding To International Biolabs

Authored by Zachary Stieber via The Epoch Times,

U.S. Director of National Intelligence Tulsi Gabbard and other intelligence officials are investigating U.S. funding to overseas laboratories handling biological research.

Initial searches of intelligence files showed that the U.S. government has provided money to more than 120 biolaboratories in more than 30 countries, a spokesperson for the Office of the Director of National Intelligence told The Epoch Times in an email on May 12.

That includes biolabs in Ukraine that “may be at risk of compromise due to the ongoing Russia-Ukraine war” and other laboratories that have researched highly contagious pathogens, potentially including research that enhanced the pathogens’ virulence or transmissibility, with little visibility or oversight, according to the office.

The Department of Defense in a 2022 document said the United States had invested approximately $200 million since 2005 to support work at 46 Ukrainian laboratories, health facilities, and diagnostic sites.

Gabbard issued new guidance to officials that directs them to step up the collection of information on laboratories and related facilities outside the United States, which is already yielding new details on clinical trials being performed at the facilities, officials said.

The information has raised ethical, financial, and security concerns, according to the Office of the Director of National Intelligence.

“The COVID-19 pandemic revealed the catastrophic global impact research on dangerous pathogens in biolabs can have,” Gabbard said in a statement.

“Yet despite these obvious dangers, politicians, so-called health professionals ... and entities within the Biden administration’s national security team lied to the American people about the existence of these U.S.-funded and supported biolabs and threatened those who attempted to expose the truth.”

She said that the Trump administration is “working closely with partners across the government to identify where these labs are, what pathogens they contain, and what ’research' is being conducted, to end dangerous Gain-of-Function research that threatens the health and wellbeing of the American people and the world.”

The first COVID-19 cases were detected in 2019 near a biolaboratory in Wuhan, China, that received funding from the United States.

Gabbard’s investigation was prompted by a May 5, 2025, executive order from President Donald Trump that forbade federal funding from supporting risky research, or experiments aimed at increasing functions of a virus, unless proper oversight is in place.

Trump said in the order that “dangerous gain-of-function research on biological agents and pathogens has the potential to significantly endanger the lives of American citizens” and that the government had previously approved funding for research “in China and other countries where there is limited United States oversight or reasonable expectation of biosafety enforcement.” COVID-19, he said, “revealed the risk of such practices.”

Tyler Durden Wed, 05/13/2026 - 10:45

WTI Holds Gains Despite Biggest SPR Drawdown In 45 Year History, Production Jumped

Oil prices are higher this morning (extending its 8%-plus surge of the last three days) as Middle East tensions simmer and global stockpiles shrink at a record pace.

WTI topped $103 and Brent crude traded near $108 a barrel, erasing its retreat earlier on Wednesday, after the IEA said global observed oil inventories declined at a rate of about 4 million barrels a day in March and April.

Saudi Arabia told OPEC that its output sank to the lowest level since 1990.

“With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period,” the Paris-based IEA said in its Oil Market Report.

The market will remain “severely undersupplied” until October even if the conflict ends next month, the agency said.

For obvious reasons, this morning's official inventory and supply data (for the US) is now top of mind.

API

• Crude -2.2mm

• Cushing

• Gasoline +502k

• Distillates -319k

DOE

• Crude -4.3mm (-2.5mm exp)

• Cushing -1.7mm

• Gasoline -4.08mm - 13th weekly draw in a row

• Distillates +190k - first build in 7 weeks

Crude stocks saw a bigger than expected drawdown last week (the third week in a row) as Cushing inventories drop and while Distillates saw a small build, Gasoline stocks plunged... again...

Source: Bloomberg

The drawdowns from the Strategic Petroleum Reserve continue to accelerate. The 8.6mm barrel draw was the largest on record...

Source: Bloomberg

US crude production jumped last week...

Source: Bloomberg

Crude exports jumped back up to near the 6 million barrel a day mark, rising 742,000 barrels to around 5.5 million barrels a day. Anything above 4 million barrels a day is generally considered robust demand and in recent weeks the US sets its all-time record for crude exports as the Iran war disrupts flows globally. 

Imports of Venezuelan crude soared to 598,000 barrels a day, the highest since early 2019 when the US first imposed a de facto ban on oil imports from the country. 

Refinery runs bounced back in a big way and are now just shy of levels seen at the same time last year as maintenance season wraps up.

Valero Port Arthur was finally able to restart its largest crude unit, following a end-March fire, helping to bolster crude processing in the region. 

WTI extended gains, topping $103.50 this morning, as Martijn Rats, commodities strategist at Morgan Stanley, told clients in a Monday note: "That this is the largest oil supply disruption in the history of the oil market is neither an exaggeration nor controversial."

Morgan Stanley forecasts the market will lose another billion barrels over the course of 2026 due to the time required to restart oilfields, repair refineries and reposition the tanker fleet'

“We expect this destocking environment to continue over the next number of months and ultimately drive a restocking phenomenon longer-term,” Plains All American Pipeline LP Chief Executive Officer Willie Chiang said on an earnings call Friday. 

Tyler Durden Wed, 05/13/2026 - 10:37

Chinese Supertanker Sails Out Of Hormuz In Rare Exit

As president Trump was on his way to China, a Chinese tanker appears to have exited the Strait of Hormuz as it sails toward an area where the US has enforced a blockade, ahead of talks between US President Donald Trump and counterpart Xi Jinping, Bloomberg reported today, citing ship-tracking data showing the VLCC moving south along the eastern side of the chokepoint.

The supertanker which sailed past Iran’s Larak island, and into the Gulf of Oman, is Yuan Hua Hu, owned by Cosco, and would be only the third tanker carrying oil for China from the Persian Gulf that has traversed Hormuz since the start of the war. The vessel is broadcasting its Chinese origin and crew, Bloomberg said, as other vessels have done previously to secure safe passage.

Yuan Hua Hu’s draft indicates it’s fully loaded with oil, or close to the vessel’s 2 million barrel capacity. It was seen lifting from Iraq’s Basrah terminal in early March, according to ship-tracking data. The vessel was chartered by Unipec, the trading arm of Chinese state refining giant Sinopec, according to a fixture seen by Bloomberg.

In April, two very large Chinese crude carriers were allowed to pass the Strait of Hormuz under Iran’s toll system that demands payment of $2 million per supertanker to pass. One of those was the same Yuan Hua Hu that is currently moving along the strait.

China imports the bulk of its energy from the Middle East, and while it has amassed substantial crude oil stockpiles that are helping it weather the worst of the crisis - anecdotally over 1.4 billion barrels - restoring normal flows from the Persian Gulf is important for one of the world’s top energy importers.

Earlier in the war, reports emerged that Beijing had pressured Iranian officials to stop attacking vessels carrying crude oil and LNG via Hormuz. Judging from later events that involved Iranian strikes on vessels in the chokepoint, Tehran did not yield to the pressure.

The moment is delicate for relations between the United States, China, and Iran as President Trump heads to Beijing for talks with President Xi on topics that are bound to include traffic via the Strait of Hormuz. According to media reports, President Trump plans to have “a long talk” with President Xi about Iran, even as he told news agencies he did not need China’s help in resolving differences with Iran.

Tyler Durden Wed, 05/13/2026 - 10:10

Two Empty Qatari LNG Tankers Head Toward Gulf After Weekend Hormuz Transit Breakthrough

Bloomberg ship-tracking specialist Stephen Stapczynski has identified two empty Qatari LNG tankers, Al Gattara and Fraiha, transiting north toward the Gulf area after idling near Mauritius.

This movement comes just days after a Qatari LNG carrier successfully transited the Strait of Hormuz, suggesting that Doha may be engaged in backchannel discussions with Tehran about a gradual normalization of LNG flows through the maritime chokepoint.

Al Gattara and Fraiha could be returning to Qatar to load LNG cargoes. If confirmed, this would mark a notable development after a Qatari LNG tanker sailed through the Hormuz chokepoint over the weekend, the first seaborne LNG export from Qatar since the war began in late February. However, no empty Qatari LNG tankers had yet returned through the critical waterway for loading operations.

As of Wednesday, Hormuz tanker flows remain highly disrupted, as the U.S. and Iran have yet to agree on a deal. President Trump landed in China earlier today, and the Trump-Xi summit will focus on unfreezing the world's most critical waterway.

Polymarket:

//--> //--> Strait of Hormuz traffic returns to normal by end of May?
Yes 8% · No 93%
View full market & trade on Polymarket

We have pointed out that a one-month countdown is underway. If Hormuz traffic does not resume, the real energy crisis will begin after June. 

Tyler Durden Wed, 05/13/2026 - 09:40

Trump Mulls 'Operation Sledgehammer' If Ceasefire Collapses, But Iran Has Re-Armed

The Pentagon is considering renaming the war with Iran from "Operation Epic Fury" to "Operation Sledgehammer" if President Trump orders a renewed full-scale bombing campaign against Iran, according to an NBC News report published Tuesday.

The report came on the eve of day 75 since the US and Israel launched the conflict. US sources touted to NBC that the United States now has greater military capabilities in the region than it did before the US and Israel launched the war on February 28. But US intelligence is now also suggesting Iran's missile capability is getting back up and running as well.

US Navy file image

After Iran had clearly withstood the shock and destruction of the opening days and couple weeks of major American and Israeli bombing raids over its cities and airbases, Trump belatedly ordered more warships, carriers, and troops into the region (Marine Expeditionary Force) - after which the blockade of Iranian ports was eventually put in place.

Now amid the heavier US naval and combined forces build-up in the CENTCOM area, "We are in a better spot now than on February 27," a US official said to NBC. "We have more firepower and capability."

The reported name change appears part of the Trump administration's effort to navigate around the War Powers Resolution, which is the 1973 law designed to limit executive war powers and reinforce Congress's constitutional authority to declare war.

According to NBC, the name change would be to underscore how seriously the administration is considering resuming the war, and could allow Trump to argue that it restarts the 60-day clock that requires congressional authorization for war, by way of the name change loophole.

While Republicans hold control of the Senate and have a slim majority in the House, there have lately been signs of bipartisan frustration at how the war is going, and the coming financial impact on the American public.

Also, even though the Pentagon has its assets in place if fighting were to resume, fresh reporting in NY Times and elsewhere indicates that Iran too has re-armed and regrouped.

"U.S. Intelligence Shows Iran Retains Substantial Missile Capabilities. Secret new assessments say Iran has operational access to 30 of its 33 missile sites along the Strait of Hormuz, suggesting that its military remains far stronger than President Trump has asserted," NY Times reports.

The report also indicates, "The Trump administration’s public portrayal of a shattered Iranian military is sharply at odds with what U.S. intelligence agencies are telling policymakers behind closed doors, according to classified assessments from early this month that show Iran has regained access to most of its missile sites, launchers and underground facilities."

This further opens up the possibility that US forces could sink into protracted quagmire should the White House choose to escalate the conflict through a renewed bombing campaign, or else launching some kind of ultra high-risk ground operation to recover Iran's nuclear material.

Interesting how U.S. intelligence reports are fluctuating, one moment Iran’s military is obliterated, another it’s retaining its capabilities. No leadership, then reports of serious cracks in the system, then a conclusion that Mujtaba is consolidating power. That’s completely… https://t.co/3iZAfMhZel

— Ali Hashem علي هاشم (@Alihashem) May 12, 2026

Trump is still insisting on taking Iran's "nuclear dust" out of the country, but how that precisely happens is anyone's guess - and would likely prove to be a long shot.

On Tuesday, speaker of Iran's parliament, Mohammad Bagher Ghalibaf, said  his country's military stands ready to "teach a lesson" to any aggressor as Trump has said the ceasefire is hanging by a thread. "Our armed forces are ready to respond and to teach a lesson for any aggression," he said on social media. "A bad strategy and bad decisions always lead to bad results - the world already understands this."

Tyler Durden Wed, 05/13/2026 - 08:50

Yields Spike As Producer Prices Explode Higher In April

After yesterday's hotter than expected CPI (driven in large part by Energy, but seeing some contagion into Services costs), this morning's Producer Price print for April was expected to show a major surge in annual wholesale inflation.

With the eight straight monthly increase, PPI rose by a massive 1.4% MoM (vs +0.5% MoM exp) - the biggest MoM jump since March 2022, lifting PPI by a stunning 6.0% YoY (vs 4.8% YoY exp). That is the hottest PPI YoY since Dec 2022...

Source: Bloomberg

Services and Energy saw the biggest rise (while construction costs actually deflated very modestly)...

Core Producer Prices spiked 1.0% MoM (more than triple the +0.3% exp) smashing Core PPI YoY up 5.2% (also the hottest since Dec 2022)...

Source: Bloomberg

And finally, one could argue this is as bad as it gets for the energy component as oil prices have stabilized...

Source: Bloomberg

But of course, the pipeline of those energy costs is perhaps only just starting to trickle into the rest of the economy.

PPI triggered a spike in 2Y yields...

Now back above 4.00% at their highest since March with the market now pricing in a 50% chance of one rate-hike in 2026...

It appears any chance of Warsh cutting rates (as per Trump's expectations) are off the table... for now.

Finally, there is perhaps a silver lining from this ugly PPI report. Other than airfares (which rose 3%) the components that feed through into PCE inflation were pretty tame; portfolio management fees dropped 2.4% and the various medical-care components showed a maximum rise of 0.3%.

That may mitigate the impact of the report, but it’s still hard to totally ignore the risk that inflation becomes a more pressing concern moving forward. 

Tyler Durden Wed, 05/13/2026 - 08:40

UK Risk Spreads Oddly Calm As PM Starmer Faces Growing Threat Of Ouster

Wes Streeting is reportedly poised to resign as UK health secretary and launch a formal challenge to UK PM Keir Starmer in a Labour Party election.

Following a meeting with Starmer in Number 10 (which lasted just 16 minutes), an “ally” of the health secretary told The Times that Streeting was “going to go for it”.

Around 100 Labour MPs have publicly called for Starmer to resign although a similar number of lawmakers have urged challengers to hold back from launching a leadership bid.

Starmer’s leadership is hanging by a thread after Labour lost nearly 1,500 councillors across English councils and were defeated by nationalist parties in Wales and Scotland.

A slew of ministerial resignations have so far failed to force Starmer’s downfall this week.

As Bloomberg reports,s everal allies of Streeting have been among those to say he should go, leading lawmakers to conclude that he is attempting to build pressure against the premier ahead of announcing a challenge.

“I think it’s being a bit over dramatized,” Starmer loyalist Nick Thomas-Symonds said on BBC Radio 4 on Wednesday, ahead of Starmer’s meeting with Streeting.

“Anyone would think we were talking about the final scene at Casino Royale or something.”

Trade unions have joined the calls for change.

“It’s clear that the Prime Minister will not lead Labour into the next election, and at some stage a plan will have to be put in place for the election of a new leader,” unions affiliated with the party said in a statement published Wednesday morning.

In a statement alongside the King’s Speech this morning, Starmer said the country stood at a “pivotal moment”.

He said multiple crises had meant that the “status quo had repeatedly made working people pay the price”.

“This time must be different. And this King’s Speech shows it will be different with a plan to make this country stronger and fairer.”

Starmer’s move was seen as effectively daring his opponents to come out and publicly challenge him, a position that his deputy, David Lammy, put voice to in Downing Street on Tuesday evening.

“It’s been 24 hours now, and nobody has come forward to put themselves forward in the processes that exist in the party,” Lammy told reporters.

“No one seems to have the names to stand up against Keir Starmer, and for those who are suggesting that he should stand down, they should say which candidate would be better.”

Interestingly, the odds of a Starmer resignation in the short-term (by the end of May) have tumbled...

...while the odds of him leaving by year-end have soared...

And while the UK is in the midst of a political crisis that could see off its sixth Prime Minister in only a decade, Bloomberg's Simon White notes that risk spreads are remarkably contained.

A measure including UK asset swap spreads, gilt spreads, bank CDS, sterling, etc, is only modestly wider and is below where it was on the outbreak of the Iran war, Chancellor Rachel Reeves’ first budget, and the ill-fated, short-lived premiership of Liz Truss.

Gilt yields are indeed higher, and are so across the curve, which is suggestive of extra risk premium for holding UK debt.

“I am underweight gilts,” said Shinji Kunibe, a portfolio manager at Sumitomo Mitsui DS Asset Management Co. in Tokyo.

“Yields have already risen beyond Truss-era levels, so they’re attractive if we see any positive signals. But with so much uncertainty, I doubt anyone is willing to touch gilts right now.”

However, that has happened to other countries too - albeit to a lesser extent - due to the energy shock, muting the spread impact on the UK.

“I’d love to buy them because obviously long-end yields are so enticing on paper,” the chief multi-asset strategist at HSBC said in an interview on Bloomberg radio.

But with a potential challenge to Prime Minister Keir Starmer’s leadership keeping volatility high, “right now, gilts are a half-hour trade.”

There is also perhaps a hope that in the gilt market that the potential replacements for Keir Starmer are beginning to preach greater fiscal orthodoxy, if recent political commentary is to be believed.

Tyler Durden Wed, 05/13/2026 - 08:25

Bessent's "Suffocating" Iranian Regime Strategy Materializes In Kharg Island Satellite Imagery

Treasury Secretary Scott Bessent's description of "suffocating" the Iranian regime through economic and financial pressure, whether via sanctions or the US military blockade of the world's most critical maritime chokepoint, now appears to be showing up in the data.

New geospatial intelligence indicates that Iran's main crude export terminal has gone quiet, while a separate report suggests seaborne oil exports have effectively been halted for the past month.

The first report comes from Bloomberg, which cited European satellite imagery showing a massive bottleneck developing at Iran's energy complex: no ocean-going tankers at Kharg Island, the country's main export terminal, on May 8, 9, and 11. This marks the longest stretch in no crude tanker loadings since the US-Iran conflict began nearly three months ago.

Kharg Island’s loading terminals were observed completely empty yesterday for the first time since mid-April, despite 19 tankers waiting nearby with ~25M bbl of capacity.

A recent 80,000 bbl oil slick suggests sustained infrastructure damage has halted all crude departures since… pic.twitter.com/6EKKigQghP

— Windward (@WindwardAI) May 12, 2026

Iran continued loading crude throughout the early weeks of the war, using tankers as floating storage after the US Navy effectively blocked ships from exiting the Hormuz chokepoint in mid-April, creating a massive energy bottleneck for Tehran. 

At the end of last week, we reported that a massive oil leak spanning dozens of square miles of water was spotted off Kharg Island. This was based on open-source satellite imagery.

Image source: Soar

"The slick appears visually consistent with oil," said Leon Moreland, a researcher at the Conflict and Environment Observatory, to Reuters. He believes it covers an area of approximately 45 square km (nearly 18 sq miles).

While it's unclear what may have caused it, or the extent of possible damage to Kharg Island's infrastructure or possibly docked tankers, the island has been attacked by US aerial forces in the recent past.

If Kharg Island remains idle and storage capacity reaches its limit, Iran could be forced into deeper oil production cuts.

"To our best knowledge, Iran hasn't successfully exported any crude oil by sea over the past 28 days. Some refined products managed to escape because US OFAC did not slap sanctions on those tankers," research firm Tanker Trackers wrote on X. 

To our best knowledge, Iran hasn't successfully exported* any crude oil by sea over the past 28 days. Some refined products managed to escape because US OFAC did not slap sanctions on those tankers.

In addition, Kharg Island hasn't loaded any tankers since 2026-05-06 as a result…

— TankerTrackers.com, Inc. (@TankerTrackers) May 12, 2026

This very development would support Bessent's claims: "We are running a marathon over the past 12 months, and now we are sprinting toward the finish. They are not able to pay their soldiers. This is a real economic blockade."

Ten days ago, Bessent forecasted that Iran's oil industry may need to start shutting in wells "in the next week" as the country's crude storage is "rapidly filling up."

"Their oil infrastructure is starting to creak," he said. "It hasn't been maintained again because of our decades-long sanctions against them."

Tyler Durden Wed, 05/13/2026 - 08:10

Futures, Yields And Oil All Rise As Trump Arrives In China

US equity futures are up (alongside oil and yields, go figure), reversing yesterday's modest losses, as optimism around the earnings potential of AI outweighs concerns over hot inflation readings bringing dip buyers back to drive tech stocks higher, with traders betting that the tech rally has further room to run while also hoping on good news from the Trump-Xi summit set to start today in Beijing. As of 7:30am ET, S&P futures were up 0.2% and Nasdaq futures rose 0.7% thanks to a rebound in Semi stocks in the Asian and EMEA sessions. In premarket trading, semis are bid as yesterday’s dip buyers appear to be once again rewarded. NVDA is up 2.5% as CEO Huang joining Trump’s China trip. Chip and memory sotcks, the key drivers of the past month’s narrow rally in the artificial-intelligence trade, posted broad gains. While there were no material updates on US / Iran, today attention shifts elsewhere as Trump’s China trip kicks off (with both Elon and Jensen on board AF1); the President appears to be in deal-making mode and China is said to oppose SoH tolls, though the Middle East is not expected to be a focal point. The dollar climbed 0.2% as commodities are mixed with strength in Ags and copper, while oil is unchanged erasing all of its overnight losses. Mag7 names underperforming broader indices as Cyclicals ex-Energy are outperforming. Today’s macro data focus is on PPI following the hawkish CPI print yesterday

In premarket trading, Mag 7 stocks are mixed: Nvidia up 2.4% as CEO Jensen Huang joins President Donald Trump on his visit to China.
(Tesla +1.2%, Alphabet +0.4%, Amazon +0.3%, Meta -0.1%, Microsoft -0.2%, Apple -0.3%)

• Chipmakers, opticals and storage firms gain as supply for global memory chips, key to AI infrastructure build-outs, tightens further. The sector is also getting a boost from Huang’s trip to China.
• Arteris Inc. (AIP) gains 24% after the semiconductor company’s first-quarter revenue beat estimates and it raised its full-year revenue guidance following strong AI-driven demand.
• Karman Holdings (KRMN) is down 5.6% after the aerospace & defense company reported adjusted earnings per share for the first quarter that matched the average analyst estimate.
• Nextpower (NXT) rises 13% after the solar-equipment company raised its fiscal 2027 outlook for revenue. It also said it agreed to acquire the assets of Zigor Corp.’s power conversion business and its US based subsidiary, Apex Power.

In other corporate news, Subprime lender Goeasy adopted a shareholder rights plan as its results showed more consumer credit strain. Hedge fund Dymon Asia Capital is on track to reach $8 billion in AUM by the third quarter as more global investors seek to back Asia-based hedge funds. In AI news, Anthropic is said to be in talks to raise new capital of at least $30 billion at a $900 billion valuation. The company also warned investors to avoid a number of secondary marketplaces as unauthorized sellers of the company’s shares. AI chipmaker Cerebras Systems is said to be guiding prospective investors that it expects to prices its IPO above the top of its marketed range. Capacity constraints and a tightening supply of critical components threaten to throttle the brisk growth for China’s AI hardware suppliers, not for a lack of AI demand. SoftBank reported a surge in quarterly profit due to valuation gains on its OpenAI investment, boosting confidence at the Japanese company to bet even more on the ChatGPT maker. 

Tech stocks are rallying again as investors count on the vast earnings potential of AI to withstand worries over elevated oil prices, with flows from the Middle East showing no sign of normalizing. Traders are also banking that this week’s summit between Trump and China’s Xi Jinping could unlock a series of trade deals, especially around semiconductors.

“The most difficult question for investors right now is to find hedge trades in case the war in Iran drags on and oil prices stay high,” said Marija Veitmane, head of equity research at State Street Global Markets. “The best place to hide would be companies with stronger earnings and margins, as well as highly visible and predictable earnings. All roads lead to tech.”

One of the aims from the Trump-XI meeting in China this week is to avoid another rare earth shock. However, an analysis from Bloomberg Economics sees China as likely to keep dominating rare earth supply chains through at least 2030. AI chip technology is another likely topic for discussion, especially now that Nvidia’s CEO has joined a roster of US business leaders accompanying Trump on the visit.

Higher oil costs have started to seep into consumer prices, pushing bond yields up as investors fear central bankers will have little choice but to tighten policy. Markets will get another reading Wednesday on US inflation, with producer prices expected to show the war pushing costs up throughout the supply chain.

“The PPI data today will likely confirm the spike in inflation,” said Joachim Klement, head of strategy at Panmure Liberum. “Inflation in the US is rising so quickly that even if Kevin Warsh wants to cut interest rates, he may not have any arguments to do so by the time he shows up at the Fed.”

In other assets, oil inventories are falling around the world at a record pace and will continue to drop for months, according to the IEA. Copper extended gains above $14,000 a ton, inching toward a record high seen earlier this year, as supply risks mount on mine disruptions around the world. 

Looking at earnings, Dynatrace is set to report numbers before the market opens. Earnings from Cisco and Birkenstock follow later in the day. Cisco’s growth outlook for the year remains durable given stable enterprise demand and quickening investment in AI networking infrastructure, BI said. 
Conferences include Bank of America global healthcare in Las Vegas and Bank of Montreal global farm to market / chemicals in New York.  

In Europe, the Stoxx 600 trades higher by 0.3% rebounding from the previous session’s losses as investors parse earnings reports and track a broader rally in technology. Here are some of the biggest movers on Wednesday:

• Alstom gains as much as 5.2% after the French rolling-stock group reported its latest earnings, which analysts say is a reassuring update following its preliminary FY release on April 17, when it also withdrew its FY guidance, sending shares 27% lower on the day.
• Merck KGaA shares jump as much as 9.4%, the most in more than seven months, after the German company reported better-than-expected results for the first quarter and boosted its adjusted Ebitda forecast for the full year.
• Umicore gains as much as 15% following an upgrade to buy from neutral at Goldman Sachs, which sees clear re-rating potential for the Belgian materials technology group based on the performance of its Recycling division.
• E.On shares gain as much as 4.6% after the German power company reported first-quarter results. Analysts at Jefferies and RBC Capital tout strength in retail operations.
• Alfen surges as much as 27% after delivering first-quarter results above analyst expectations, driven by its Smart Grid and Energy Storage divisions.
• Adecco shares drop as much as 14% after the recruitment company posted a disappointing margin in the first quarter and warned this will contract in the second.
• Siemens shares fluctuate after announcement of a share buyback and results that are described as slightly disappointing by some analysts, who say strength in its core Digital Industries and Smart Infrastructure divisions was offset by a weaker margin in Mobility.
• Swatch shares fall as much as 7.6%, the most in over a year, as Oddo BHF doubts whether the pocket watch models of the Swiss watchmaker’s collaboration with Audemars Piguet will bring a sustained boost in revenue.
• Norbit drops as much as 7.4% after the Norwegian sensor technology firm reported its latest earnings. DNB Carnegie says both first-quarter results and second-quarter guidance were on the “softer side” and could lead to 6-8% cuts to full-year 2026 Ebit estimates.
• Vistry shares fall as much as 13% as the UK homebuilder cautions that first-half profit in 2026 is likely to be significantly lower than in the previous year and pauses its share buyback program.

Earlier in the session, Asian equities climbed on Wednesday, as a rally in South Korea more than offset a selloff in Taiwan. The MSCI Asia Pacific Index was up as much as 0.7%, with SK Hynix and Samsung Electronics the biggest boosts as tech sentiment was supported by news that Nvidia CEO Huang joined US President Trump’s trip to China as a last-minute addition. Alibaba’s ADR has been choppy in pre-market trade, currently lower by 1.7% after 4Q revenue fell short of estimates. Korea’s benchmark gained 2.6%, while Japanese stocks extended their advance to a third day. Investors in Asia are increasingly driven by expectations around the AI infrastructure buildout and are focused on whether the technology’s lofty promises will translate into earnings. That has largely overshadowed concerns about supply chains and energy risks stemming from the war in the Middle East.

In FX, the Bloomberg Dollar Spot Index rose 0.2%, a third day of gains, after a report on Tuesday showed the US consumer-price index rose 3.8% from a year ago.NZD/USD fell 0.5% to 0.5923, as the kiwi led G-10 losses against the dollar. EUR/USD fell 0.3% to 1.1702, a one-week low; French unemployment rose to the highest level in five years. GBP/USD slips 0.1% to 1.3522; Keir Starmer faces growing pressure to step down as Britain’s prime minister

In rates, treasuries yields are flat, with yields within about 1bp of Tuesday’s close, with oil prices steady. US 10-year yield near 4.46%, 2-year near 3.99% are little changed, with UK 2-year about 2bp lower on the day. Gilts outperform in choppy session, though gains were trimmed after report that cabinet minister Wes Streeting is preparing to trigger a leadership contest. Focal points of US session include April PPI data and $25 billion 30-year new-issue bond auction. Treasury refunding auctions conclude with $25 billion 30-year bond sale at 1pm New York time, following tails for 3- and 10-year notes over past two days. WI 30-year yield near 5.02% is 14.4bp cheaper than last month’s, which tailed by 0.5bp. IG dollar issuance slate includes a couple of offerings so far. Twelve companies priced a combined $15.6 billion of debt Tuesday, paying about 3.8 basis points in new issue concessions on deals that were 4.3 times covered. Two companies opted to stand down and are expected to try again Wednesday after PPI release

In commodities, WTI crude oil futures are little changed, hold recent gains around $102 as Middle East tensions simmer and global stockpiles shrink at a record pace. Brent, meanwhile, fluctuated around $108 a barrel after rising more than 8% over the past three sessions. Oil inventories are falling around the world at a record pace and will continue to drop for months, the International Energy Agency said.. Spot gold trades down 0.4% as silver adds 0.5%. Bitcoin up 0.3%. 

Economic data slate includes April PPI at 8:30am. Fed speaker slate includes Collins (11:30am), Kashkari (1:15pm) and Logan (7pm)

Market Snapshot

• S&P 500 mini +0.2%
• Nasdaq 100 mini +0.8%
• Russell 2000 mini +0.2%
• Stoxx Europe 600 +0.5%
• DAX +0.6%
• CAC 40 -0.2%
• 10-year Treasury yield little changed at 4.46%
• VIX -0.1 points at 17.94
• Bloomberg Dollar Index +0.2% at 1194.95
• euro -0.4% at $1.1696
• WTI crude -0.7% at $101.47/barrel

Top Overnight News

• The discussions about possibly replacing “Operation Epic Fury” with “Operation Sledgehammer” underscore how seriously the administration is considering resuming the war started on Feb. 28, and could allow Trump to argue that it restarts the 60-day clock that requires congressional authorization for war. NBC
• U.S. Intelligence Shows Iran Retains Substantial Missile Capabilities. Secret new assessments say Iran has operational access to 30 of its 33 missile sites along the Strait of Hormuz, suggesting that its military remains far stronger than President Trump has asserted. NYT
• Both Iraq and Pakistan have cut deals with Iran to ship oil and liquefied natural gas from the Gulf, according to five sources with knowledge of the matter, in a demonstration of Tehran's ability to control energy flows through the Strait of Hormuz. RTRS
• Trump said he would urge China's Xi Jinping to "open up" to U.S. business on his way to a summit in Beijing on Wednesday, adding Nvidia's Jensen Huang to a group of CEOs travelling with him. The CEOs accompanying Trump are drawn mainly from companies seeking to resolve business issues with China, such as Nvidia, which has struggled to get regulatory permission to sell its powerful H200 artificial intelligence chips there.
• OpenAI investment gains helped drive a surprise rise in SoftBank’s quarterly profit, while Tencent and Alibaba revenue missed. BBG
• China’s tech-heavy ChiNext index hit a record as an AI-driven rally lifted chipmakers and tech suppliers. BBG
• Construction projects are stalling around the world as the closure of the Strait of Hormuz disrupts the supply of crucial materials and drives up prices for oil-derived products like paint and insulation. FT
• For the first time in three years, inflation is outstripping growth in Americans’ paychecks. Blame the gas pump. Americans are currently paying about $4.50 a gallon for regular gasoline, according to AAA, up more than 50% since the initial U.S.-Israeli attack on Iran in late February. Pay increases aren’t keeping up. WSJ
• Oil broke a run of three straight daily gains even as the Strait of Hormuz remains practically shut and Trump repeated his threats against Iran. Inventories are falling at a record pace of about 4 million barrels a day, the IEA said. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed following on from the mostly subdued handover from Wall Street, where sentiment was dampened by tech weakness, higher oil prices and firmer-than-expected inflation, while the geopolitical situation remained uncertain with Iran said to require five confidence-building conditions for it to enter a second round of talks with the US. ASX 200 declined amid weakness in the top-weighted financial sector after shares in Australia's largest lender CBA, slumped around 10% following its earnings results, while the recent federal budget announcement failed to spur risk appetite and was seen by analysts to hit consumer stocks. Nikkei 225 clawed back initial losses after encouraging current account and bank lending data, and despite hawkish market pricing of around a 70% chance for a BoJ rate hike next month. Hang Seng and Shanghai Comp were mixed as participants digested earnings releases and with the focus on the looming Trump-Xi summit, while the US President is on his way to Beijing with various CEOs on Air Force One, including the late addition of NVIDIA's Jensen Huang.

Top Asian News

• BoJ said there was no meeting held between the US Treasury Secretary Bessent and BoJ Governor Ueda.
• US Treasury Secretary Bessent said that thanks to the powerful bond between US President Trump and Japanese PM Takaichi, the relationship between the US and Japan is stronger than ever before, while he was happy to share with the PM the belief that the fundamentals of the Japanese economy are indeed strong and resilient. Furthermore, he said they exchanged views on the US-Japan investment program, critical minerals, President Trump's upcoming visit to Beijing, and other subjects of mutual interest.

European bourses (STOXX 600 +0.4%) have begun to reverse the losses seen at the start of the week, despite the mixed Asia-Pac and stateside trade. The DAX 40 is the outperformer, helped by a flurry of positive earnings, while the CAC 40 lags its peers despite the gains in STMicroelectronics and ArcelorMittal. Sectors point to a more mixed picture. Basic Resources tops the pile, as copper extends above USD 14k/t while aluminium, nickel and iron ore are also bid. The underperformer is Media, closely followed by Travel & Leisure. TUI reported Q2 earnings, in which it sees strong demand in the Holiday Experiences Business Area in H2.

Top European News

• UK Labour-affiliated union group TULO said Labour cannot continue on this path, is it clear the PM will not lead Labour into the next election.
• SNP to force a vote on UK PM Starmer via an amendment to King’s Speech debate.
• UK government appoints loyalists to fill gaps left by government resignations.
• UK government whips believe Wes Streeting will make his move on Thursday, to avoid clashing with the King’s Speech, while they also believe Andy Burnham doesn’t have an MP ready to quit, and that aside from the 87 MPs who’ve publicly called for Starmer to go, the same number privately want him to step down, according to Sky News reporter Jon Craig.

Trade/Tariffs

• The US White House has reportedly not ruled out potential Chinese direct investment in the US, Semafor reported.
• US President Trump posted that NVIDIA CEO Huang is on Air Force One along with a number of CEOs of large US companies, including Tesla, Boeing, Cargill, Citi, Goldman Sachs, GE Aerospace, Micron & Qualcomm. Trump added that his first request to Chinese President Xi will be to open up China so that these brilliant people can work their magic.
• US Treasury Secretary Bessent and Vice Premier He held talks. Following the conclusion, Chinese state media reported that China and the US held candid, in-depth and constructive exchanges.
• EU Commission has outlined a potential compromise to break the EU-US trade deal deadlock, with specific reference to the sunrise clause, Politico reported.

FX

• G10s trade under a relatively strong USD, with recent upside in DXY as it vaulted its 100-DMA (98.45) and 200-DMA (98.52), to make a current peak at 98.58.
• USD continues to be driven by oil/yields as geopolitics remain in focus. Today, US President Trump is expected to arrive in China for his summit with Xi, where talks are expected to take place on Thursday and Friday. No breakthrough is expected in US-China relations, though the situation in Iran will likely be one of the core topics, with some fearing an Iran-for-Taiwan bargain. (Full analysis at 06:50BST on the headline feed). The session also sees a number of Fed speakers, including Collins, Kashkari and Logan.
• GBP trades a touch lower against a strong buck, but stronger against the Euro despite continued political uncertainty. As it stands, the PM intends to stay in his post and run in any leadership contest against challengers (likely Streeting. Potentially, Miliband, Rayner, Carns, and/or Burnham). Theoretically, if a contest were to be triggered now, Starmer would be the favourite (100+ MPs back him, against c. 90 who have expressed no-confidence). Recent newsflow has been around a very brief Starmer-Streeting meeting. We are unlikely to see a readout due to the King's speech later today. In terms of timing, at 14:30 BST, two backbench (Junior) Labour MPs will ask "typically light-hearted" questions, according to Politico. Opposition leader Badenoch speaks third, then the PM will respond to her questions.
• EUR/GBP trades towards the lower end of Tuesday's 0.8653-0.8697 range, Cable continues to move lower as it did on Tuesday, currently supported by the 1.3530, with further support lower at 1.35, the previous session's low. Ultimately, any leadership change would likely be a shift to the left and therefore weigh on the Pound.

Central Banks

• ECB's Muller said the EU has not fallen into stagflation.
• ECB's Villeroy said the ECB must be ready to intervene on second round effects; underlying inflation is currently under control.
• ECB's Rehn said inflation expectations are still anchored.
• ECB's Radev said once again, seeing an external price shock.
• ECB's Dolenc said can expect consumer expectations from inflation to rise. Energy prices have a limited effect on the economy for now.
• ECB’s Elderson said banks need to update resilience plans to cater for the higher probability of severe disruptions because of Anthropic’ s Mythos AI tool.
• Riksbank Minutes: Market expectations regarding central bank policy rates have been closely interlinked with the inflation risks stemming from energy prices.
• BoJ will continue to closely monitor how the Middle East situation will affect economy and prices, according to an official.
• UBS sees the Fed to cut 25bps in December 2026 and March 2027 (prev. forecast cuts in September and December).

Fixed Income

• Global benchmarks are incrementally firmer/flat this morning as crude benchmarks pull back from recent highs, and as geopolitical/political newsflow remains light.
• USTs are firmer by a couple of ticks and currently trade within a narrow 109-31+ to 110-04 range, but ultimately residing near the prior day’s trough at 110-01. As a reminder, US paper was pressured on Tuesday amidst higher energy prices and after a hotter-than-expected US CPI report, which has led markets to reprice hawkishly. Most recently, UBS pushed back its call for a cut at the Fed to December 2026 and March 2027 (prev. forecast cuts in September and December). Focus today will be on US PPI and a flurry of Fed speakers.
• Bunds are essentially flat in a quiet 124.59 to 124.87 range. Earlier this morning German Wholesale Prices M/M topped expectations, with the Y/Y figure also rising from the prior. The statistics office cited the war in the Middle East as the region for the jump in prices, “particularly for energy products and raw materials”. Despite the jump in prices, Bunds were choppy but ultimately little moved. Thereafter, EZ GDP 2nd estimate was not subject to revisions, whilst Employment Change Q/Q fell from the prior. No move following the German 2047/2054 auctions.
• Gilts initially gapped higher at the open, peaking at 86.31, as UK paper found some reprieve following on from a dire session seen in the prior session; traders may have also priced in the chance of quiet domestic politics, ahead of the King’s speech. However, since the cash open, UK paper has gradually trundled lower and is now only firmer by a handful of ticks – conforming to the action seen across peers. From a yield perspective, the 10yr remains above the 5% mark and a little short of the peaks made on Tuesday (5.13%).
• Markets remain on watch for domestic politics, and particularly on Wes Streeting after his short meeting with PM Starmer – UK journalists are questioning whether this signals increased likelihood of a potential leadership challenge. Before the duo met, Sky News reported that UK government whips believe Wes Streeting will make his move on Thursday, to avoid clashing with the King’s Speech, while they also believe Andy Burnham doesn’t have an MP ready to quit.

Commodities

• In geopolitics, US President Trump said Iran will either make a deal or be “decimated”, while reaffirming the effectiveness of the blockade. Meanwhile, Iran reiterated five conditions before entering nuclear talks, including sanctions relief, reparations and recognition of sovereignty over the Strait of Hormuz. US intelligence reportedly assessed Iran still retains significant missile capabilities along the Strait of Hormuz. Further, Sources familiar with negotiations said Iran’s top conditions before nuclear talks include ending the war on all fronts, lifting sanctions, releasing frozen funds, compensation for war damages and recognition of Iranian sovereignty over the Strait of Hormuz.
• Elsewhere, the IEA released its monthly oil market report today, in which it forecasts world oil supply to fall by 3.9mln bpd in 2026, assuming Strait of Hormuz flows gradually resume from June (prev. forecast 1.5mln bpd fall); Sees total world oil supply 1.78mln bpd lower than demand in 2026 (vs. prev. forecast 0.41mln bpd higher). IEA noted the war in the Middle East is depleting global oil inventories at a record pace.
• WTI July and Brent July futures have trimmed losses seen overnight, with the former in a USD 96.79-98.58/bbl range and the latter in a USD 106.09-107.56/bbl. Dutch TTF is now flat intraday after recovering from sub-EUR 46/MWh lows to levels north of EUR 46.50/MWh.
• Spot gold resides in a USD 4,685.90-4,727/oz range, well within yesterday’s USD 4,638.36-4,773.58/oz parameter, with the 100 DMA at USD 4,786.96/oz. Spot silver takes a breather from six straight sessions of gains, with the precious metal pulling back a touch after hitting resistance around USD 87.80/oz. Elsewhere, Shanghai Futures Exchange adjusted the price limit for the AG2705 silver futures contract to 17%.
• Base metals are posting varying gains across the board amid a broadly but cautiously positive risk appetite across Europe and US markets, and despite a firmer USD. 3M LME copper resides north of USD 14k/t in a 14,086.58- 14,191.48/t range at the time of writing.
• IEA OMR: world oil supply to fall by 3.9mln bpd in 2026 assuming Strait of Hormuz flows gradually resume from June (prev. forecast 1.5mln bpd fall); Sees total world oil supply 1.78mln bpd lower than demand in 2026 (vs. prev forecast 0.41mln bpd higher). Sees world oil demand falling by 420k bpd in 2026 on Iran war (prev. forecast 80k bpd drop).
• US Private Inventory Data (bbls): Crude -2.2mln (exp. -2.3mln), Distillates -0.3mln (exp. -1.3mln), Gasoline +0.5mln (exp. -2.5mln), Cushing -1.8mln
• US NEC Director Hassett said this is a temporary energy shock and that President Trump is confident the Strait of Hormuz will be open soon, while Hassett said regarding the SPR that they are releasing as fast as possible. Furthermore, he said Trump's view is that we should modernise the gasoline tax.

Geopolitics

• US President Trump posted "When the Fake News says that the Iranian enemy is doing well, Militarily, against us, it’s virtual TREASON in that it is such a false, and even preposterous, statement. They are aiding and abetting the enemy! All it does is give Iran false hope when none should exist."
• "Pakistan’s Foreign Ministry is all set to hold a consultative meeting of its envoys in Middle East, West Asia and important capitals on Thursday in Islamabad", Pakistani journalist Mallick posted.
• Iranian Foreign Ministry spokesman said Iran will obtain a more accurate assessment of the American position through Pakistani mediators, Al ArabyTV reported. Further stated that Tehran rejects maximalist demands regarding its Nuclear Program and considers them unjust.
• Iranian Foreign Minister Araghchi said a lack of good faith and the dishonesty of the US is the most significant obstacle to a definitive end to the war, while he commented that the main cause and origin of the current situation in the Strait of Hormuz is the US and Israeli regime's military aggression against Iran, and subsequently the repeated violation of the ceasefire through the continued blockade of Iran's maritime ports. Furthermore, he said they are holding consultations to draft regulations concerning arrangements for the Strait of Hormuz in accordance with international law.
• Pakistan and Iraq have struck agreements with Iran to transport liquefied gas and oil via the Strait of Hormuz amid shipping risks, according to sources.
• China-flagged supertanker attempts to exit Hormuz, according to reports citing data.
• India, Japan and most European nations joined the Hormuz Strait draft resolution, while 112 countries back the resolution, according to Al Jazeera.
• A group of bipartisan US senators is writing to Secretary of State Rubio to pledge their support for the Taiwan Relations Act, Semafor reported; Twelve senators signed the letter.
• North Korea leader Kim inspected munitions factories and called for modernisation and efficiency gains in the arms industry, according to KCNA.

US Event Calendar

• 7:00 am: United States May 8 MBA Mortgage Applications, prior -4.4%
• 8:30 am: United States Apr PPI Final Demand MoM, est. 0.5%, prior 0.5%
• 8:30 am: United States Apr PPI Ex Food and Energy MoM, est. 0.3%, prior 0.1%
• 8:30 am: United States Apr PPI Final Demand YoY, est. 4.8%, prior 4%
• 8:30 am: United States Apr PPI Ex Food and Energy YoY, est. 4.34%, prior 3.8%
• 11:30 am: United States Fed’s Collins Speaks on US Economy
• 1:15 pm: United States Fed’s Kashkari in Moderated Discussion
• 7:00 pm: United States Fed’s Logan in Moderated Conversation

DB's Jim Reid concludes the overnight wrap

In nearly two decades of writing the EMR it’s rare that I finish it off while watching the sun break through the clouds and go down over an ocean but that’s the scene as I type this evening from the US West Coast. For the amount of times I finish it in the cold and dark, I hope you'll give me this treat! Rest assured there is no glass of wine influencing this daily!

I wish markets were as serene as the view, with increased nervousness that a US-Iran deal looks further away than most would have hoped when the more positive news flow came through a week ago. In response to that uncertainly Brent was up a further +3.42% to $107.77/bbl yesterday whilst WTI (+4.19%) also crossed the $100/bbl threshold to $102.18/bbl. Although we've edged down just under a percent in Asia, we've now edged back above the levels seen before the positive Axios story broke last week that a deal could be imminent. The higher oil price led to a sell-off in fixed income and equities yesterday which wasn't helped by a hotter core US CPI print than the market expected, even if it was in-line with our forecast.

Turning to rates first, that CPI print and worries over sustained costs from a prolonged conflict drove the 10yr Treasury yield (+4.9bps) to 4.46%, its highest since June 2025. The moves were similar for 2yr (+3.7bps to 3.99%) and 30yr yields (+3.9bps to 5.02%), with the latter now just 7bps below the post-2007 high it reached in May last year. That higher US April CPI print showed headline inflation rising +0.6%m/m as expected (+3.8% y/y vs +3.7% y/y exp.) but core inflation slightly beating consensus estimates (+0.4%m/m vs +0.3%m/m and +2.8%y/y vs +2.7%y/y exp.).

In addition to the upside surprise in core, there were a few concerning details within the data. The effects of the Middle East conflict pushed up categories like energy (+3.8% m/m), airfares (+2.8% m/m) and postage and delivery services (+3.5% m/m), while grocery prices (+0.68% m/m) saw their largest monthly rise since 2022. And the Cleveland Fed’s trimmed mean CPI measure came in at +0.43% m/m, its sharpest monthly rise since January 2024. Kevin Warsh has been a proponent of looking more at this measure. Unfortunately it doesn't seem to be moving in the dovish direction he expected. For more on the release and implications, see our US economists’ reaction piece here.
The hawkish market interpretation was later reinforced by comments from Chicago Fed Goolsbee, who said that the print was “worse than expected” with services inflation being amongst the worst affected. In response, the amount of fed hikes priced by next April rose to a new high of 20bps (+6.0bps on the day). The next big watchpoint for the Fed will be today’s PPI report for April, which our US analysts expect to rise +0.5% for headline and +0.3% for core. So that’s a tough inflation backdrop as Kevin Warsh takes over as Fed Chair later this week, with the Senate confirming him to the Fed Board in a 51-45 vote yesterday while the final vote to confirm him to a 4-year term as Chair is expected today.

The hawkish inflation data combined with the Middle East conflict led to a challenging backdrop for equities. However, this also wasn't helped by chipmakers and tech selling off with the Philly Stock Exchange Index falling back by -3.01%, although well off the -6.75% intra-day lows. Elsewhere, the S&P 500 (-0.16%), Nasdaq Composite (-0.71%) and Magnificent 7 (-0.49%) also fell but again bounced off the lows. The S&P 500 was down by -1% at one point, but a partial in tech and a rotation into defensive sectors including healthcare (+1.93%) and consumer staples (+1.56%) helped limit the losses. The mood was more challenging in Europe, with multiple indices declining with the Iran and oil fears. That included the DAX (-1.62%), CAC 40 (-0.95%) and Stoxx 600 (-1.01%), although the FTSE 100 (-0.04%) losses were not as steep.

Staying with Europe, UK politics weighed on bond yields throughout the session. During yesterday’s cabinet meeting, PM Starmer reiterated his call that he would stay on despite the number of MPs wanting Starmer to quit crossing the 81 required to mark a leadership challenge if they coalesced around a candidate. It’s important to note that any calls or letters for Starmer to resign don’t trigger anything unless MPs explicitly back an alternative candidate. So even as four ministers resigned from government yesterday, it does look increasingly possible that he will see this through for now, with Polymarket odds of Starmer leaving by June 30 down to 33% this morning from as high as 80% on Monday night. We have the King's Speech today which sets out the upcoming legislative agenda of the government. With the fate of Starmer still in the balance though, yields on the 10yr yield (+10.4bps to 5.10%) rose to its highest level since 2008, and the 30yr gilt yield (+9.5bps to 5.77%) reached its highest since 1998. Other markets are also at multi-year highs, but the UK has underperformed over most recent periods.

Indeed the 30yr German bund yield also rose to its highest level since 2011 yesterday. We did receive the German May Zew investor expectations, which rose to -10.2 vs -19.5 estimate. So that was not as bad as feared. Elsewhere, 10yr bond yields also sold off across bunds (+6.1bps), OATs (+7.9bps) and BTPs (+9.3bps). So it was an overall rough day for global bonds.

In Asia, the KOSPI (+1.25%) is back to leading the way again, after earlier dropping by -3.0%, while the Nikkei (+0.15%) is edging higher. Chinese related stocks are edging lower with US futures flat and European futures up just over half a percent. Yields on the 20-year JGBs have increased by +4.2bps, trading at 3.49%, surpassing its January peak to reach the highest level since 1997.

Finally, we saw some ongoing headlines around Ukraine and Russia. Putin’s press secretary Dmitry Peskov said it was still too early to talk about "specifics" as he addressed Putin’s comment over the weekend that the war in Ukraine is “coming to an end”. While Ukraine talks have been on hold since January, recent comments may signal an emerging shift in Moscow’s stance amid Russia’s slowing military momentum and rising domestic discontent according to opinion polls. This is more of a slow-burn story but one that saw European defence stocks post a fourth consecutive decline yesterday, with Rheinmetall (-1.99%) falling to its lowest level since March 2025. Those moves also came as CBS News reported a memo outlining terms of a potential US-Ukraine defence deal that would see Ukraine export military tech to the US.

To the day ahead now, data includes US April PPI, Germany April wholesale price index, Eurozone March industrial production, Q1 employment. For Central Banks the Fed’s Collins and Kashkari will speak, as will the ECB’s Lagarde, lane and Radev, and the BoE’s Mann

Tyler Durden Wed, 05/13/2026 - 07:59

Anthropic Eyes $30B Raise At $900B Valuation As UBS Says Claude Is "Gaining Ground"

AI is still where the money is flowing...

A Bloomberg report late Tuesday revealed that Anthropic, the maker of Claude, is in early discussions with investors to raise at least $30 billion at an eye-popping valuation of nearly $900 billion.

Clearly, this could become the largest funding round to date for founder Dario Amodei.

The Claude maker is in discussions to raise the new capital at a valuation of more than $900 billion, not including the investment, said the people, who spoke on condition of anonymity as the information is private. The round is expected to close as soon as the end of this month, one person said. The deal is not finalized and no term sheet has been signed. -BBG

Talks of a new funding round at a valuation above $900 billion follow Google's $10 billion investment at a $35 billion valuation earlier this year, with an additional $3 billion contingent on performance milestones. Amazon is also investing $5 billion at the same valuation, with plans to add $2 billion over time.

Anthropic could be poised for an initial public offering as soon as October, according to a separate Bloomberg report.

Earlier, the outlet reported that Anthropic has warned investors about unauthorized sellers of its shares on secondary marketplaces, calling them "stock scams," and that some sellers are issuing fraudulent share certificates.

Anthropic specifically warned about new offerings from secondary platforms Hiive and Forge Global. Anthropic also named Sydecar, Open Door Partners, Lionheart Ventures, UpMarket, Unicorns Exchange, and Pachamama.

Shifting to a new note from UBS about its latest semi-annual Enterprise AI survey, analyst Timothy Arcuri and his team surveyed IT executives at 139 companies about their AI initiatives.

Arcuri found that "the survey continues to point to Microsoft, OpenAI, and Nvidia as the key enterprise AI winners, but with Anthropic gaining ground."

Arcuri added more color about OpenAI, Anthropic, and Nvidia:

The progress made by OpenAI and Anthropic in the enterprise market was evident in this survey.

OpenAI ranked #1 again in terms of the most popular AI model provider to enterprises, #2 for general-purpose AI tools with ChatGPT, and #3 in coding with OpenAI Codex.

Anthropic made solid ground in the enterprise, notably moving into the #2 position in the AI coding arena with Claude Code.

Nvidia remained the dominant choice for AI chips among enterprises, with Google, surprisingly, slipping in several categories. Among the SaaS/apps firms, it was not surprising to see ServiceNow in ITSM AI and Salesforce in CRM AI stand out.

The survey again pointed to strong AI pull-through in data spend, with the most material pull-through for cloud data lakes and analytics, a tailwind for Snowflake, Databricks, and the hyperscalers. We offer our key survey takeaways for the cybersecurity space in a separate note.

Polymarket odds:

//--> //--> Will Anthropic not IPO by June 30, 2026?
Yes 98% · No 2%
View full market & trade on Polymarket

Meanwhile, OpenAI has not set an official IPO date. The latest reporting suggests it has been laying the groundwork for a public listing, with a possible filing in the second half of 2026.

So potentially, in the back half of the year, there will be multiple IPOs of top chatbot startups ...

Tyler Durden Wed, 05/13/2026 - 07:40

Parents Sent To Prison After Isolating Kids For Four Years Over COVID Fears

Authored by Steve Watson via Modernity.news,

A court in northern Spain has sentenced a couple to prison after they kept their three children confined indoors for nearly four years due to intense fears of Covid.

The isolation, which began in December 2021 and continued until the children were rescued in April 2025, left the youngsters with significant mental and physical conditions, including difficulties walking, bowel and bladder control issues, and delayed development.

The case, underscores the profound and lasting effects that pandemic-related anxiety had, and continues to have, on some individuals.

Parents who refused to let their three children go outside their house for FOUR YEARS due to Covid fears, leaving them with extreme mental and physical conditions, are sentenced to prison https://t.co/3XZdGBSRLd

— Daily Mail (@DailyMail) May 11, 2026

Christian Steffen, 53, a German freelance tech recruiter, and his wife Melissa Ann Steffen, 48, an American-born naturalised German, lived in a rented home in Oviedo, Spain. 

Prosecutors stated that the parents “locked the minors up inside their home and isolated them completely from the rest of the world, denying them contact with other people both physically and through other forms of communication.”

They added that “The children didn’t even know their relatives or any other people that weren’t their parents. They never went outside, not even to the garden of their home, for almost four years because of the unfounded fear the accused had, and they had instilled in their children, that they might be infected with something.”

The children — a boy aged ten and eight-year-old twins — were not enrolled in school. They received homeschooling from their parents, had not seen a doctor since 2019, and lived in conditions described as squalid, with soiled nappies, rubbish, and inadequate sleeping arrangements including broken cots for the twins. 

Physical examinations revealed bowed legs, hunched posture, irritated skin, and other issues stemming from prolonged confinement and lack of medical care. After rescue, one child was reported to have knelt on the grass outside and touched it with amazement.

The couple was convicted of habitual psychological violence within the family environment and family abandonment. Each received a sentence of two years and four months in prison, plus an additional six months for family abandonment. 

They were also disqualified from parental authority for three years and four months, banned from approaching the children within 300 metres, and ordered to pay €30,000 in compensation to each child.

Defence lawyers argued that the situation was “voluntary isolation” from the world by parents who had taken a series of “probably wrong but not criminal decisions.” 

They noted that the Steffens had caught Covid and decided to self-confine and educate their children from home out of an “unsurmountable fear” of falling ill again. The parents insisted during the trial that they had always acted in the interest of the youngsters.

A city hall source told El Mundo that a vigilant neighbour, Silvia, raised the alarm after noticing suspicious supermarket deliveries including large quantities of nappies during school hours. She compiled a detailed dossier that led to a police investigation. 

Regional Social Rights and Welfare Minister Marta del Arco commented: “These are children whose trauma from what they experienced was bound to surface later on, and both educators and psychologists are working very intensively with them because they really need it.”

This case reflects how deeply some individuals were affected by the fear surrounding Covid-19. While most adapted as restrictions eased, a small number internalised the risks to an extreme degree, with tragic consequences for their families.

The incident comes as researchers continue to examine the wider psychological and developmental effects of the Covid era. 

A March 2026 study from the University of East Anglia found that Covid lockdowns may have permanently damaged children’s brain development, particularly executive functions such as behaviour regulation, focus, and adaptation. 

Professor John Spencer noted: “Children who were in reception when the country shut down showed much slower growth in key self-regulation and cognitive flexibility skills over the next few years than children who were still in preschool.” The study highlighted the critical role of peer socialisation during key early years.

Recent analyses, including a January 2026 international study on long Covid, have shown varying reports of brain fog, depression, and cognitive issues linked to the pandemic period, influenced by cultural and healthcare factors. 

Broader surveys from organisations like the WHO and Mayo Clinic have documented elevated levels of anxiety, depression, and stress persisting years after the initial outbreak, affecting both adults and children worldwide.

The Oviedo case illustrates an extreme outcome of that widespread fear environment. While the parents have been held accountable by the court, the episode serves as a stark reminder of the human cost when anxiety overrides normal family life and child development needs. 

As support services work with the affected children in Spain, the findings from ongoing research emphasise the importance of monitoring and addressing the long-term legacy of the pandemic on younger generations.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Wed, 05/13/2026 - 07:20

The Overhyped Nuclear Hazard America Has Mastered

Nuclear waste remains one of the most misunderstood aspects of modern energy production in the United States. Critics continue to portray it as a dangerous, unsolvable problem, yet the country has managed it safely and effectively for decades with an impeccable safety record. 

Spent fuel from commercial reactors sits securely in pools and dry casks at more than 70 sites across 35 states. Transportation casks have traveled millions of miles without any releases. Not that there was ever a concern for one of these casks breaking open, considering their testing involves being dropped from helicopters and struck by a rocket-propelled locomotive...

Nuclear waste shipping casks have been through a hell of a lot of testing. Now with Red Alert music. pic.twitter.com/D28AgF9Zgp

— Nick Touran (@whatisnuclear) January 17, 2026

France reprocesses the vast majority of its used fuel, demonstrating viable technology at commercial scale. In the United States, no significant radiation releases have occurred from commercial nuclear waste storage or handling in over half a century.

We previously covered Visual Capitalist's depiction of nuclear waste around the world and how the most dangerous waste represents less than a quarter of one percent of the total nuclear waste. 

A recent Utility Dive article highlights shifting approaches to this issue and examines the Department of Energy’s proposal for “Nuclear Lifecycle Innovation Campuses.” These facilities would manage the entire nuclear fuel cycle, including reprocessing or recycling of the nation’s approximately 95,000 metric tons of spent fuel, which increases by roughly 2,000 tons each year. 

The campuses aim to combine waste management with regional economic benefits, creating long-term jobs and revenue streams for host states. Interest has already emerged from several states, including Utah, South Carolina, Tennessee, Washington, Idaho, and Nebraska.

TN is the global epicenter of nuclear energy, & we're grateful for a new opportunity to lead the nation with a proposal to locate a @ENERGY Nuclear Lifecycle Innovation Campus in Oak Ridge.

Link: https://t.co/019O2Hu3Sc pic.twitter.com/26NfsQahP4

— Gov. Bill Lee (@GovBillLee) April 2, 2026

U.S. taxpayers currently bear the costs for waste management and legacy cleanup. The DOE’s Environmental Management program operates with an annual budget exceeding $8 billion, while the federal government’s liability for permanent disposal now stands at more than $56 billion. The Trump administration also recently asked for an expansion of the funding. 

Yet this material increasingly looks like a valuable resource rather than solely a liability. Private companies are beginning to compete aggressively for access to spent nuclear fuel. The DOE recently awarded over $19 million to firms including Oklo, Curio Solutions, Flibe Energy, and SHINE Technologies to advance recycling, transmutation, and isotope-harvesting technologies. 

Startups view the material as a feedstock for new reactor fuel, medical isotopes, and industrial applications rather than waste. As demand grows for high-assay low-enriched uranium (HALEU) and specialized isotopes, competition for this resource is expected to intensify.

Nuclear waste is incredibly hazardous, if mishandled. But, America has not mishandled it. With private-sector innovation now treating spent fuel as a strategic asset, the longstanding “problem” is transforming into an economic opportunity.
 

Tyler Durden Wed, 05/13/2026 - 06:55