Submitted by Molly Schwartz, Cross-Asset Marco Strategist at Rabobank

We have maintained the view that markets are sorely underestimating the impact that the war in Iran will have on global economies and financial markets, and that one day there would come a reckoning. While markets are still highly volatile and the situation in the Middle East highly uncertain, yesterday’s price action suggested that some traders are getting a reality check.

Remember folks, we’re still in a ceasefire! The iffy terms as to whether other countries in the region like Israel, Lebanon, and the UAE were fair game were never decidedly concluded, though the Strait of Hormuz was expected to remain open.

The drone attacks came after announcements from FARS early in the morning yesterday that the IRGC had struck an American warship near Jask Island, around 160km from the chokepoint (that’s 100 miles in freedom units). CENTCOM immediately denied that any US military assets had been struck, but the warship did appear to be associated with the UAE.

The drone strikes escalated further, with Iran attacking critical energy infrastructure in the UAE, including drones striking the Fujairah port—the first such attacks against the UAE in nearly a month, though these were not the first attacks targeted in Fujairah since the onset of the war. Iranian state TV quoted a military official who said that there had been “no premeditated plan to attack oil facilities in UAE’s Fujairah,” but rather it was the “result of the US military’s adventurism to create passage for illegal ship transit” through the Strait.

Trump announced that the US would spearhead an initiative called “Project Freedom” to escort ships who are “neutral and innocent bystanders” out of the Strait. There have yet to be concrete details provided, though the process technically began yesterday morning “Middle East time.” According to Bloomberg, the lack of clear assurances has left “several shipowners” skeptical, so it may take a while before we see anyone take up the Administration’s offer for “clear passage.”

US Treasury yields surged higher yesterday in a bear flattening fashion, with the 2 year up 8.3bp, approaching the 4.00% level, while the 10 year climbed 7.2bp to approach 4.50%. This comes as brent crude oil grinded back to $114/bbl amid the escalation in regional tensions.

With tensions escalating, US 2 year breakevens have also started climbing higher, breaking their highest level since April 8. Meanwhile, 5-year, 5-year inflation swap forwards have been heading higher as well, breaking their highest level since February 13 at 2.45%. The US OIS curve is reflecting this increased market hawkishness as well, now suggesting around 8bp worth of Fed hikes by year end.

We have posed the idea that the existence of what appears to be the world’s worst ceasefire comes as US efforts to de-escalate so as to escalate down the line. It also appears that the Trump Administration may have been deregulating to regulate.

In other news, the New York Times reported that the US is considering “vetting AI models before they are released.” This comes several weeks after an emergency meeting was hosted with leaders from major institutions, including Powell and Bessent, after it was discovered that Anthropic’s newest unreleased model, Mythos, posed serious cyber security issues if leveraged by malicious actors.

In early 2025, Trump rolled back a Biden-era executive order to establish guidelines for testing and regulating AI systems in his own executive order called “Removing Barriers to American Leadership in Artificial Intelligence,” which seeks to “revoke certain existing AI policies and directives that act as barriers to American AI innovation, clearing a path for the United States to retain global leadership in Artificial Intelligence.”

The approach as presented by the NYT suggests a change in hear from the Administration, as the executive order would “create an AI working group that would bring together tech executives and government officials to examine potential oversight procedures,” as well as a “formal government review process for new AI models.” When and if this executive order comes to fruition, it might be a fun exercise to compare and contrast the Biden and Trump orders and see how much they have in common.

The US Treasury Department released its QRA yesterday, announcing USD 189bn in net borrowing for Q2, up USD 79bn from its Q1 estimates due to “lower projected net cash flows,” but “partially offset by the higher-than-assumed beginning-of-quarter cash balance” which is USD 122bn higher than previously estimated. Additional details will be released on Wednesday.

Despite Manufacturing surveys solid (and US factory orders surging), expectations are for the Services sector surveys today to show stagflationary signals (weak growth, surging prices).

S&P Global’s Services PMI disappointed in April (final), falling from its flash print of 51.3 to 51.0, but still up from multi-year lows below 50 in March, showing just marginal activity growth despite weak drop in sales volumes.

ISM Services PMI also disappointed in April, falling from 54.0 to 53.6 (vs 53.7 exp) amid tumbling new orders and high prices.

Source: Bloomberg

Under the hood it was not a pretty picture at all with new orders slowing dramatically, Prices Paid holding near cycle highs, and employment contracting for the second month in a row…

“Although business activity returned to growth after a small decline in March, it’s clear the pace of growth has kicked down a couple of gears since the start of the year,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The survey data are indicative of GDP growing at a modest 1% annualized rate.

“Growth may weaken further,” warns Williamson, as service providers are reporting lower inflows of new business for the first time in two years, reflecting an intensifying hit to demand from the war in the Middle East.

“The direct impact of the war has been most evident in consumer-facing services, as high prices have led to a pull-back in discretionary spending on activities such as holidays and recreation, though transport has also been curbed by high fuel prices and travel disruptions.” 

However, a secondary additional driver of renewed weakness is a drop in demand for financial services, in part linked to heightened uncertainty about market outlooks but also reflecting expectations of higher inflation and interest rates, which has hit real estate and lending activity.

But it’s not just weak growth/orders, prices are surging too… broadly.

“A further increase in input cost inflation reflected not just higher fuel prices but a widening spread of goods and services rising in price, as well as higher wages, which will feed through to consumer price inflation in the coming months.”

The scale of the price rises will put pressure on the Fed to prevent higher inflation becoming entrenched, but the smell of stagflation remains in the air – central bankers’ arch-nemesis.

With oil prices soaring to multi-year highs, it was only a matter of time: Diamondback Energy, one of the largest shale oil producers, announced it is boosting crude output in response to rising prices caused by the Iran war.

The company that operates in the Permian Basin of West Texas and New Mexico is pumping more than 520,000 barrels a day, 3% more than its original full-year guidance, and plans to sustains those levels, Chief Executive Officer Kaes Van’t Hof wrote in a letter to shareholders on Monday.

“We believe there is a legitimate supply-demand imbalance and that the associated price signal is the catalyst to begin to grow production,” he wrote. “Because of our positioning, our preparation and this price signal, we are bringing incremental barrels to the market immediately.”

Van’t Hof’s comments come just days after supermajors Exxon Mobil and Chevron told investors they wouldn’t significantly alter production plans in response to the unprecedented war-drive disruption to Persian Gulf energy supplies. Exxon’s plan to raise Permian Basin output by 12% this year pre-dated the Iran war, while Chevron is sticking to plans to keep production from the region essentially flat. 

Diamondback CEO Kaes Van’t Hof

However, now that one company has broken the seal, expect a rush to hike output across the US E&P sector.

As Bloomberg notes, Diamondback isn’t the first shale specialist to see the Middle East conflict as an opportunity to bolster production. Billionaire Harold Hamm’s Continental Resources made a similar pledge last month. And who can blame them: crude futures are up by more than 50% since the war in Iran began in late February, and after all, when it comes to commodities, the age-old saying is that “the cure for high prices is high prices.”

Of course, with more output comes more capex: Diamondback is also is raising spending guidance by 4% this year to about $3.9 billion, with plans to add as many as three additional drilling rigs and run a handful of frack crews for the rest of this year, Van’t Hof wrote.

Diamondback’s CEO made waves exactly one year ago when he warned markets that the US is “at a tipping point” saying the US shale output has peaked, and slashed his capex. What a difference a year makes. 

The company is also working through its backlog of ready-made wells that have already been drilled and await fracking as a way to unleash more oil more quickly.

After using a stoplight analogy in investor letters over the past year to describe his thinking on whether to accelerate or hit the brakes on output, Van’t Hof said Monday that “the light has turned green, and Diamondback is well-positioned to respond to the current macro environment.”

Ford Motor Company posted a sharp sales decline in April as demand for new vehicles cooled across much of the auto industry, with the company reporting a 14.4% drop year over year to 178,667 vehicles sold, according to Autoevolution.

The weaker month pushed Ford’s year-to-date total to roughly 636,000 deliveries — still ahead of Hyundai Motor Company and Kia Corporation, but well behind Toyota Motor North America.

Autoevolution writes that the slowdown comes as automakers face softer demand after last year’s buying rush, when consumers moved quickly to purchase cars ahead of potential tariff increases. Higher gas prices tied to geopolitical tensions and persistently expensive vehicle prices have also made buyers more cautious.

While General Motors has yet to release April results, several rivals have already reported weaker numbers. Toyota’s U.S. sales fell 4.6% last month to just over 222,000 vehicles, bringing its year-to-date total to nearly 792,000. American Honda Motor Co. was nearly flat, while Hyundai and Kia also slipped slightly after a strong start to the year, though their combined sales still topped 565,000 through April.

Ford’s weakness was broad-based. EV sales dropped nearly 25%, hybrid sales plunged 32.5%, and traditional gas-powered vehicles fell 11.8%. Truck sales declined more than 14%, SUVs were down 16.6%, and the company’s bread-and-butter Ford F-Series slid nearly 14% to just over 61,000 units. Sales at Lincoln were even worse, falling more than 21%.

There were a few bright spots. The Ford Mustang climbed more than 18% in April, while the Ford Bronco rose more than 18% to around 17,000 sales. The Ford Explorer and Ford’s heavy-duty truck lineup also posted gains. On a year-to-date basis, Mustang remains Ford’s strongest performer with sales up roughly 39%, followed by the Explorer, Transit van, Ranger pickup, and Bronco. At Lincoln, the Lincoln Aviator remains one of the few bright spots, with sales up nearly 10% so far this year.

Lawmakers toppled Romanian Prime Minister Ilie Bolojan’s pro-EU ​government in a no-confidence vote on Tuesday, putting at risk the country’s sovereign debt ratings, its access to ‌EU funds and the stability of its currency. Of the valid votes cast in the parliament, 285 voted for the motion of censure and four against, exceeds the 251 signatures collected last week for the motion and above the 233 needed to pass, the official parliamentary count showed.

Romania’s Prime Minister Ilie Bolojan

Bolojan has led a minority government since late April when the Social Democrats – the largest party in parliament – called for his resignation and then walked out of the four-party coalition and teamed up with the far-right opposition to file a no-confidence vote.

Although a snap election looks unlikely, financial markets are concerned that ​the turbulence could mean Bucharest wavers in its commitment to narrowing the European Union’s biggest budget deficit. Romania’s leu ⁠currency fell to a record low against the euro ahead of Tuesday’s vote.

The current coalition came to power 10 months ago with a ​view to containing the gains of the far right after a series of polarizing elections, and it had begun to reduce the deficit, narrowly ​avoiding a ratings downgrade from the last rung of investment grade. But the Social Democrats – without whom a pro-EU majority cannot be achieved – have repeatedly clashed with Bolojan as his austerity measures have hit their voters and patronage networks, while their popular support has bled away to the far right.

Nevertheless, opinion polls still show Bolojan is ​the most popular politician in the ruling coalition. Bolojan will stay on as interim premier with limited powers until a new government is approved by ⁠parliament. 

“Can anyone say how Romania will function from tomorrow, do ​you have a plan?” Bolojan asked lawmakers before the vote. “Romanians will understand that you can govern differently, with respect for public money, and you cannot undo that.”

Romania’s ‌next ⁠parliamentary election is not due until 2028. It has never held an early election and analysts say the likelihood of one now is small as the opposition hard-right Alliance for Uniting Romanians (AUR) leads in opinion polls.

Centrist President Nicusor Dan, who nominates the prime minister, is now expected to invite parties for negotiations and attempt to rebuild the four-party pro-EU coalition under a different member of Bolojan’s Liberals or perhaps a technocrat as prime minister. The Social Democrats (PSD) have often said ​they would rejoin a pro-EU coalition ​under a different premier.

Bolojan’s party ⁠has so far ruled out collaborating with the Social Democrats again, though some senior party members have pushed for reconciliation.

There is life after the no-confidence vote,” PSD leader Sorin Grindeanu told reporters. “We want to ​keep broadly this coalition.”

A Romanian Liberal member of the European Parliament, Siegfried Muresan, called the alliance between the ​leftists and AUR ⁠in support of the no-confidence motion “anti-European”.

“The formation of a new government will become their responsibility,” he told Reuters. However, Liberal deputy prime minister Catalin Predoiu said his party “must leave its options open”.

Romania must continue to shrink ​its deficit as well as implement reforms in order to tap some 10 ​billion euros worth of EU recovery and resilience funds before an August cutoff date. The deficit is expected to narrow to 6.2% of economic output this year from ​more than 9% in 2024.

Authored by Aldgra Fredly via The Epoch Times,

Tech billionaire Elon Musk on May 4 agreed to pay $1.5 million to resolve a Securities and Exchange Commission (SEC) lawsuit alleging he violated securities laws over the delayed disclosure of his Twitter stake.

A filing dated May 4 states that Musk’s revocable trust will pay a civil penalty of $1.5 million to the commission as part of the settlement, subject to approval by the court.

According to the filing, once the proposed settlement is approved by the court, the SEC will “file a stipulated dismissal of Elon Musk in his personal capacity, which will resolve this case in its entirety.”

The SEC filed the lawsuit in January 2025, alleging that Musk violated federal securities laws by delaying disclosure of his stake in Twitter before his bid to buy the platform in 2022.

The regulator said Musk crossed the 5 percent ownership threshold in March 2022, triggering a 10-day deadline to make the holding public. Musk did not disclose his holdings until April 2022, when he had already acquired a more than 9 percent stake in Twitter, according to the filing.

The SEC said the delay had allowed Musk to buy shares at “artificially low prices” and enabled him to underpay by at least $150 million for his shares after his beneficial ownership report was due.

Musk had previously sought to have the SEC suit dismissed. In August 2025, his lawyers argued that the SEC targeted Musk over his outspoken criticism of the regulator and “government overreach.”

Separately, in March, a federal jury held Musk liable for misleading Twitter shareholders by driving down the social media platform’s stock price months before acquiring it. The decision followed a civil class action lawsuit filed by Twitter investors in October 2022.

Musk agreed to buy Twitter at $54.20 per share in April 2022 but later sought to back out of the deal, prompting the company to take legal action to enforce the deal. He ultimately completed the acquisition in October 2022 and rebranded Twitter as X.

In a verdict on March 20, jurors found Musk liable for misleading investors through two social media posts he shared in 2022. The first post said the deal was “temporarily on hold” pending verification that bots accounted for less than 5 percent of users on the social media platform.

In the second post, Musk suggested that the percentage of bots could exceed 20 percent and said the buyout of Twitter could not ​go forward until he received confirmation that it was less ⁠than 5 percent. Musk’s legal team has said they plan to appeal the verdict.

Coinbase employees woke up Tuesday morning to an email from the CEO announcing a workforce reduction of up to 14% as part of a broader push to make the crypto firm “leaner, faster, and AI-native.”

CEO Brian Armstrong also released the letter on X, starting off the letter by saying:

Today I”ve made the difficult decision to reduce the size of Coinbase by ~14%. I want to walk you through why we’re doing this now, what it means for those affected, and how this positions us for the future.

According to Coinbase’s last annual report, the company had 4,951 employees. Today’s 14% workforce reduction represents nearly 700 layoffs.

Armstrong said the restructuring was necessary because “two forces are converging at the same time,” citing a crypto bear market and accelerating AI adoption as the drivers behind the layoffs:

Why now

Two forces are converging at the same time. We need to be front footed to respond to both.

First, the market. Coinbase is well-capitalized, has diversified revenue streams, and is well-positioned to weather any storm. Crypto is also on the verge of the next wave of adoption, with stablecoins, prediction markets, tokenization, and more taking off. However, our business is still volatile from quarter to quarter. While we’ve managed through that cyclicality many times before and come out stronger on the other side, we’re currently in a down market and need to adjust our cost structure now so that we emerge from this period leaner, faster, and more efficient for our next phase of growth.

Second, AI is changing how we work. Over the past year, I’ve watched engineers use AI to ship in days what used to take a team weeks. Non-technical teams are now shipping production code and many of our workflows are being automated. The pace of what’s possible with a small, focused team has changed dramatically, and it’s accelerating every day.

All of this has led us to an inflection point, not just for Coinbase, but for every company. The biggest risk now is not taking action. We are adjusting early and deliberately to rebuild Coinbase to be lean, fast, and AI-native. We need to return to the speed and focus of our startup founding, with AI at our core.

That inflection point Armstrong talks about is the urgent need to replace white-collar workers with AI agents. He continued:

What this means

To get there, we are not just reducing headcount and cutting costs, we’re fundamentally changing how we operate: rebuilding Coinbase as an intelligence, with humans around the edge aligning it. What does this mean in practice?

Fewer layers, faster decisions: We are flattening our org structure to 5 layers max below CEO/COO. Layers slow things down and create coordination tax. The future is small, high context teams that can move quickly. Leaders will own much more, with as many as 15+ direct reports. Fewer layers also means a leaner cost structure that is built to perform through all market cycles.

No pure managers: Every leader at Coinbase must also be a strong and active individual contributor. Managers should be like player-coaches, getting their hands dirty alongside their teams.

AI-native pods: We’ll be concentrating around AI-native talent who can manage fleets of agents to drive outsized impact. We’ll also be experimenting with reduced pod sizes, including “one person teams” with engineers, designers, and product managers all in one role.

This is an email I sent earlier today to all employees at Coinbase:

Team,

Today I’ve made the difficult decision to reduce the size of Coinbase by ~14%. I want to walk you through why we’re doing this now, what it means for those affected, and how this positions us for the…

— Brian Armstrong (@brian_armstrong) May 5, 2026

In markets, Bitcoin is trading more than 1% higher, approaching $81,000.

Coinbase shares rose 4% in premarket trading after Armstrong’s X post on restructuring. As of Monday’s close, COIN was still down 10% year to date, with shares halving from their 2025 high and recently finding support at $150.

Coinbase’s workforce reductions should come as no surprise, given that readers have been well informed (read Goldman from 2023) for several years about the coming white-collar job apocalypse sweeping corporate America.

Microsoft AI CEO Mustafa Suleyman recently warned that most white-collar jobs will be fully automated in the next 12 to 18 months.

Stock futures are higher, completely reversing yesterday’s drop with dip-buyers out in force as a fragile ceasefire between the US and Iran held after a day of clashes and sentiment is helped by a pullback in oil prices, with Brent crude futures down 1.4% as well as the US move to return 22 Iranian crew from a seized vessel. The conflict “might need to escalate in order to de-escalate,” making any market weakness a chance to add positions in stocks, according to JPMorgan strategists who said that today is shaping up to be an “Everything Rally.” As of 8:00am ET, S&P 500 futures rise 0.3% while Nasdaq 100 contracts add 0.6%. In premarket trading, semis lead gains with Mag7 mostly higher. Cyclicals (ex-Energy) are outpacing Defensives, though healthcare is rallying. Bond yields are down 1-2bp with the 10Y yield dropping to 4.42% and the Dollar catching a bid. Commodities are seeing sales in Energy, precious metals retracing losses, and Ags mixed. US economic data calendar slate includes March trade balance (8:30am), April S&P Global US Services PMI (9:45am), April ISM services and March new home sales and JOLTS job openings (10am). Fed speaker slate includes Bowman (10am) and Barr (12:30pm)

In premarket trading, Mag 7 stocks are mostly higher (Amazon +0.6%, Microsoft +0.4%, Meta +0.2%, Alphabet +0.3%, Nvidia -0.01%, Tesla +0.3%, Apple -0.2%)

Bullish (BLSH) slips 2% after agreeing to buy Equiniti from Siris Capital in a $4.2 billion deal as the crypto exchange seeks to expand in blockchain-based capital markets infrastructure.
Coinbase (COIN) rises 3% after the crypto exchange said it will cut around 14% of its workforce, citing a need to manage costs in volatile markets and amid advances in artificial intelligence.
Eaton (ETN) falls 5% after the power equipment company gave an outlook for second-quarter profit below what analysts expected.
Fabrinet (FN) drops 11%, unable to push higher a 58% year-to-date rally after a third-quarter adjusted earnings per share beat.
Fidelity National Information Services (FIS) gains 5% after the payments processor said it is co-designing a Financial Crimes AI Agent with Anthropic’s Applied AI team.
Firefly Aerospace (FLY) climbs 11% after the space and defense technology company reported revenue for the first-quarter that beat the average analyst estimate.
GeneDx (WGS) sinks 42% after the health care services firm missed first-quarter revenue estimates and cut full-year guidance. Analysts slash price targets.
GlobalFoundries (GFS) gains 5% after posting revenue for the first quarter that matched the average analyst estimate.
Inspire Medical (INSP) falls 18% after the medical devices company slashed its full-year revenue outlook, citing coding and reimbursement uncertainty for Inspire V, an implant to treat moderate-to-severe sleep apnea.
Intel (INTC) rises 3% as Apple has held exploratory discussions about using the company — as well as Samsung Electronics — to produce the main processors for its devices in the US, according to people familiar with the matter.
Iqvia (IQVA) falls 5% after the healthtech firm posted first quarter results.
ON Semiconductor (ON) is down 4% after the chipmaker gave an outlook that is largely in line with expectations. Bloomberg Intelligence wrote that the forecast suggests a recovery in key markets will be slower than hoped.
Palantir Technologies (PLTR) falls 3% even as the software company reported first-quarter results that beat expectations on key metrics, although US commercial sales disappointed. Separately, it raised its full-year forecast.
Pinterest (PINS) jumps 17% after the social-media company reported first-quarter results that beat expectations and gave a full-year revenue forecast that is above the analyst consensus.
Rockwell Automation (ROK) gains 8% after boosting its adjusted earnings per share guidance for the full year.
Shopify (SHOP) falls 7% as the commerce software maker’s revenue outlook suggests growth pace may be slowing down.

In other corporate news, Michael Burry said he sold his entire position in GameStop after it made an offer to buy eBay for about $56 billion, citing concerns about the debt the company could take on for an acquisition. In AI news, ServiceNow projected it would generate $30 billion of subscription revenue in 2030, attributing the strong outlook to traction from its AI products. OpenAI discussed spinning out the company’s robotics and consumer hardware divisions late last year, according to the WSJ. And OpenAI co-founder and President Greg Brockman testified that his stake is now worth almost $30 billion, prompting an attorney for Elon Musk to ask why he had not donated the bulk of his earnings to the ChatGPT maker’s nonprofit foundation.

Relative calm returned to the Persian Gulf on Tuesday after US and Iranian forces exchanged fire the day before and Tehran launched missiles and drones toward the United Arab Emirates. Investors also found reassurance in the fact that a diplomatic push to resolve the impasse continued. While the war in the Middle East may be rumbling on, but JPMorgan’s Mislav Matekja says there are big differences to the 2022 playbook: He doesn’t expect to see stagflation in 2H as wage growth is moving lower. At the same time, equities aren’t complacent beneath the surface, with market breadth still narrow. 

Traders have also been cheered by the AI boom and earnings that are beating despite a “very high bar,” according to Deutsche Bank’s Binky Chadha. Stock purchases by the ultimate dip-buyer – Corporate America – are helping to underpin the equity market too.  forecast from Advanced Micro Devices Inc. later on Tuesday will offer new evidence of whether the spending wave on artificial intelligence is sustainable.

“Earnings remain the fuel for the US rally,” Madison Faller, global strategist at JPMorgan Private Bank, told Bloomberg TV. “The next question is whether earnings strength can broaden beyond technology. Portfolios need more than just one sector carrying the market.”

Still, concern about the war is showing up in other assets. WTI remains stubbornly above $100, while Goldman Sachs analysts wrote that the “speed of depletion and supply losses in some regions and products are concerning,” highlighting naphtha, jet fuel and liquefied petroleum gas. Diamondback Energy said it’s boosting crude output in response to rising prices caused by the war.

Meanwhile, 30-year Treasury yields remain a touch above 5% having hit the highest since July on Monday on inflation fears and concerns about higher government borrowing estimates.

In tech, Apple has held exploratory discussions about using Intel and Samsung to produce the main processors for its devices in the US, a move that would offer a secondary option beyond longtime partner TSMC. Meta is working on a financing package for a data center in El Paso, Texas, that could total roughly $13 billion, while Alphabet is selling bonds in the euro market just months after its last megabond deal.

Monday’s flareup of violence in the Middle East has injected fresh uncertainty after strong earnings from tech megacaps and gains in chipmakers pushed equities to a succession of records. The violence erupted after President Donald Trump announced “Project Freedom,” which he described as a humanitarian effort to guide stranded neutral ships.

“Project Freedom is a way for the US to gain an upper hand in negotiations,” wrote Mohit Kumar, chief economist and strategist for Europe at Jefferies. “In the coming days, it would become clear whether the US can provide safe passage to the ships and hence can take a much tougher stance.”

In politics, the chairs of key Senate committees unveiled legislation that would greenlight $71.7 billion in spending over the next three years for Trump’s immigration enforcement agenda. A top Senate Republican has proposed spending as much as $1 billion for US Secret Service security adjustments and upgrades, including for Trump’s planned White House ballroom

Of the 322 S&P 500 companies to have reported so far in the earnings season, 82% have beaten analysts’ forecasts, while 12% have missed.

In Europe, the Stoxx 600 is up 0.6% after a sharp selloff on Monday. Technology stocks are leading gains while travel is the biggest laggard. Earnings results have been mixed. AB-InBev shares are rising after first-quarter volume growth moved back into positive territory while HSBC dropped after it reported profit that missed estimates due to an unexpected UK fraud-related charge and rising economic risks from the conflict in the Middle East. EQT raised its offer for product-testing company Intertek to roughly £8.9 billion ($12.1 billion).  Here are the biggest movers Tuesday:

AB InBev gains as much as 6.8%, the most since February 2025, after reporting a return to positive volume growth in the first quarter, ahead of expectations for a slight drop
BT Group gains as much as 6.3% in London, the most since July, after BofA raised to buy from neutral, saying its fiber build is on the “final straight” with dividends expected to be the next re-rating lever
UniCredit shares advanced 3%, the best performing stock on the Stoxx 600 Banks Index, after the Italia lender reported a record quarter with strong revenues. KBW analysts expect earnings to be well received
Dormakaba shares gain as much as 5.9% after Oddo BHF upgraded the security systems provider to outperform from neutral, citing the company’s ability to partially close the profitability gap versus leader Assa Abloy
Hugo Boss shares gain 3.4% after the German fashion designer posted first-quarter profits that outpaced expectations. Analysts say strong sales were driven by Asia, notably a return to growth in China
HSBC shares declined as much as 5.6% in London trading after the lender missed estimates in the first quarter, weighed by higher costs and impairments
Fresenius Medical Care shares drop as much as 9.4% to the lowest intraday level since October 2024, after the German company reported weak US dialysis volume for the first quarter
Raiffeisen shares drop as much as 4.1% after the bank reported profits that missed expectations, which analysts said was due to higher provisions and taxes

Asian stocks retreated from their record highs after an exchange of fire between the US and Iran cast doubt on the durability of a four-week ceasefire. The MSCI Asia Pacific Index dropped as much as 0.6%, with TSMC and Delta Electronics among the biggest drags. Markets in Japan, South Korea and mainland China were closed for holidays. Investors are again turning cautious, as heightening tensions around the Strait of Hormuz drove oil prices higher and renewed fears of global inflation. The AI trade is taking a step back after helping the MSCI gauge erase war-led losses and climb to a record high on Monday. Meanwhile, Australia’s benchmark S&P/ASX 200 index ended Tuesday down 0.2%, but pared its earlier decline after the central bank indicated that it may pause interest-rate increases. The Reserve Bank of Australia raised the cash rate to 4.35% on Tuesday, unwinding all of last year’s cycle of monetary easing. 

In FX, the Bloomberg Dollar Spot Index is little changed. USD/JPY rises 0.2% to near 157.60 after a choppy European morning session.

In rates, treasuries advance, pushing US 10-year yields down 2 bps to 4.42%. Bunds also climb, led by shorter dated maturities. Front-end Treasuries hold small gains as futures retreat from session highs in early US session, leaving 30-year yield little changed near 5.02%. Rates are underpinned by lower oil prices as investors assess a tenuous four-week Middle East ceasefire. UK 30-year yield reached 5.76%, highest since 1998, as trading resumed after Monday’s holiday.US front-end yields are about 1bp richer on the day, steepening the yield curve slightly; 10-year is little changed near 4.44%. IG dollar issuance slate empty so far but expected to pick up after nine offerings totaling $8.35 billion were priced Monday. Issuers paid less than 2bps in new issue concessions on deals that were 4 times covered. Dealers project a weekly total of about $40 billion. US session features April ISM services report and March JOLTS job openings.

In commodities, WTI crude oil futures are down 1.4%, S&P 500 futures up 0.3%, with supported from cheaper oil as the Middle East ceasefire broadly holds. Precious metals gain with spot silver up over 1%. Bitcoin rises 1% and back above $80,000.

US economic data calendar slate includes March trade balance (8:30am), April S&P Global US Services PMI (9:45am), April ISM services and March new home sales and JOLTS job openings (10am). Fed speaker slate includes Bowman (10am) and Barr (12:30pm)

Market Snapshot

S&P 500 mini +0.3%
Nasdaq 100 mini +0.5%
Russell 2000 mini +0.5%
Stoxx Europe 600 +0.5%
DAX +1%
CAC 40 +0.6%
10-year Treasury yield -1 basis point at 4.43%
VIX -0.5 points at 17.78
Bloomberg Dollar Index little changed at 1196.35
euro little changed at $1.1684
WTI crude -1.9% at $104.38/barrel

Top Overnight News

Trump’s desire to end the Iran war is being put to the test after Tehran fired at American warships on Monday and violently disrupted a U.S. effort to revive shipping in the Strait of Hormuz. Still, Trump wants to avoid a fresh bombing campaign, officials say, preferring a negotiated end to Tehran’s nuclear advancements and the weekslong war that has raised gas prices and hurt the global economy. WSJ
U.S. intelligence assessments indicate that the time Iran would need to build a nuclear weapon has not changed since last summer, when analysts estimated that a U.S.-Israeli attack had pushed back the timeline to up to a year. The unchanged timeline suggests that significantly impeding Tehran’s nuclear program may require destroying or removing Iran’s remaining stockpile of highly enriched uranium, or HEU. RTRS
Trump says war could stretch 3 more weeks, claims US ‘already won.’ ABC
Iraq is offering discounts for crude loaded this month, with tankers having to transit the Strait of Hormuz to collect the barrels. The discounts include as much as $33.40 a barrel for Basrah Medium crude, according to a notice from state oil marketer SOMO: BBG
Trump said he’s looking forward to seeing Xi Jinping, signaling his plans for the high-stakes summit later this month are still on despite fresh tensions.
Australia’s central bank has raised interest rates for a third time this year, bucking a trend among global peers as it fights inflationary pressures intensified by the conflict in the Middle East. The Reserve Bank of Australia on Tuesday raised its borrowing rate to 4.35 per cent. The move, its third consecutive rise, undid the effect of three cuts last year. FT
SEC Chairman Paul Atkins said the agency is probing fraud allegations at private credit firms. BBG
Switzerland’s inflation quickened to a 16-month high in April as energy costs jumped. Consumer prices rose 0.6% from a year earlier. BBG
The US is weighing an executive order to create an AI working group and a review process for new models. NYT
Apple Inc. has held exploratory discussions about using Intel Corp. and Samsung Electronics Co. to produce the main processors for its devices in the US, a move that would offer a secondary option beyond longtime partner Taiwan Semiconductor Manufacturing Co. INTC +380bps premkt. BBG
Japan can conduct only two more sessions of three-day interventions by November to maintain its status of having a freely floating exchange rate, based on International Monetary Fund guidelines: BBG
Ahead of Race to IPO, OpenAI Discussed Spinning Out Robotics, Hardware Divisions: WSJ
The European Union has tools it can use if Donald Trump makes excessive threats to strategic industries, according to French Trade Minister Nicolas Forissier: BBG

Iran War

US President Trump said Iran war could go on for another two to three weeks; time is not of the essence.
IRGC military source told Tasnim that the US shot two small boats carrying civilians instead of shooting IRGC speedboats.
“Iranian Defense Council member Ali Akbar Ahmadian: Our security does not accept negotiations, and Washington obstructed global navigation and energy security”, Al Jazeera reported.
Iranian President Pezeshkian has requested an immediate and emergency meeting with Supreme Leader Khamenei to ask him to stop IRGC attacks on Persian Gulf nations and prevent a recurrence, Iran International reported. Pezeshkian reportedly outlined that the IRGC attack on the UAE occurred without the knowledge of the government.
US intelligence suggests strikes from the start of the war led to limited new damage to Iran’s nuclear programme, Reuters sources say.
US State Department official to Al Jazeera said the President is clear that direct communication between Israel and Lebanon is the best path toward peace; We are working to prepare the necessary conditions and political momentum to move forward with this
Two US Navy destroyers transited the Strait of Hormuz and entered the Persian Gulf after navigating an Iranian barrage, according to defense officials who spoke to CBS News; “Iran launched small boats, missiles and drones against them”.
Maersk (MAERSKB DC) said its subsidiary’s US-flagged vehicle carrier, Alliance Fairfax, exited the Gulf via Strait of Hormuz on May 4th.
US Treasury Secretary Bessent had a “fierce row” with UK Chancellor Reeves last month over her outspoken criticism of the Iranian war, FT sources say.
US CENTCOM posted “US warships and aircraft deployed to the Middle East are enforcing the naval blockade against Iran while executing Project Freedom to support the free flow of commerce through the Strait of Hormuz.”.
US officials say military closer to resuming combat operations than 24 hours ago, Fox reported.
US President Trump reiterates he feels Europe has been “very disappointing”.
Iranian Foreign Minister Araghchi posted “As talks are making progress with Pakistan’s gracious effort, the US should be wary of being dragged back into quagmire by ill-wishers. So should the UAE.”. Full post:”Events in Hormuz make clear that there’s no military solution to a political crisis. As talks are making progress with Pakistan’s gracious effort, the U.S. should be wary of being dragged back into quagmire by ill-wishers. So should the UAE.Project Freedom is Project Deadlock.”.
Mehr News Agency said a fire broke out in two commercial ships and spread to two others in Dayyer port south of Iran; cause not clear.
“Explosions were heard tonight in the port of Bandar Abbas (Iran) and on Qassem Island (Iran) in the Persian Gulf”, N12 journalist reported citing sources in Iran.
IRGC political deputy said traffic in the Strait of Hormuz will only be done with Iran’s permission, ISNA reported; “Any kind of traffic in the Strait of Hormuz, if it is from the enemy, will be met with a decisive and crushing response”.
Iranian Parliamentary Speaker Ghalibaf said the new equation of the Strait of Hormuz is being solidified. Actions of the US and allies have threatened the security of shipping and energy.
UNSC resolution prepared by the US, Saudi Arabia, Bahrain, Qatar, the UAE, and Kuwait opens the door for potential enforcement measures, AsharqNews reported citing the resolution “to be distributed tomorrow”.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded lower following a weak Wall Street lead, with liquidity thin amid widespread market holidays across Japan, South Korea, and Mainland China. ASX 200 was pressured by weakness in the metals sector, while Westpac declined after a miss in H1 net income. Focus also turned to the RBA, which delivered its third consecutive 25bps rate hike as expected. Hang Seng followed the negative tone, led lower by tech, while mainland markets remained shut, and Stock Connect flows were absent.

Top Asian News

Foxconn (2317 TW) April (TWD): Revenue 832bln, +29.7% Y/Y. Q2 is expected to show both Q/Q and Y/Y growth.

European bourses opened mixed, but now display a clear positive bias alongside a move lower in crude prices this morning. The Euro Stoxx 50 (+0.9%) is the top performing index, whilst the FTSE 100 (-1%) is the clear laggard, as it returns from holiday and digests the recent US-Iran escalation. European sectors hold a positive bias this morning. Construction tops the pile, buoyed by post-earning strength in Geberit (+1.7%, robust results and sees strong demand across several markets). Chemicals and Financial Services complete the top three. To the downside reside Basic Resources and then Banks. The latter has been dragged down by losses in HSBC (-5%), after the Co. reported a Q1 profit miss and estimates higher than expected credit losses. Gains in UniCredit (+3%) are failing to lift the sector, with the Italian bank reporting strong profit and robust investment income. US equity futures are in the green this morning, and attempting to pare back some of the modest weakness seen in the prior session. Fed speak today includes Barr and Bowman. As for key movers today, Palantir (-2%, stronger results and lifted guidance, but US commercial revenue fell short of expectations). Elsewhere, ON Semiconductor (-4.7%, strong results, though missed on lofty expectations).

Top European News

Swiss Inflation Rate YoY (Apr) Y/Y 0.6% vs. Exp. 0.6% (Prev. 0.3%, Low. 0.2%, High. 0.4%).
Swiss Inflation Rate MoM (Apr) M/M 0.3% vs. Exp. 0.4% (Prev. 0.2%, Low. 0.2%, High. 0.7%).
Spanish Unemployment Change (Apr) -62.7K vs. Exp. -18.6K (Prev. -22.9K).

FX

DXY is steady and trades within a narrow 98.40 to 98.57 range, with geopolitical newsflow overnight relatively light and as markets await the US data docket later. The index currently trades in close proximity to its 21-DMA (98.50), 100-DMA (98.46) and 200-DMA (98.55). No doubt attention ahead will be on any geopolitical developments, but domestically, traders will also eye US ISM Services, PMI Finals, JOLTS and a couple of Fed speakers.
Antipodeans are diverging this morning, with the Kiwi marginally topping the G10 pile whilst the Aussie lags. This is largely a function of a weaker AUD, after the RBA’s decision to hike its policy rate by 25bps (as expected). The accompanying statement was also net-hawkish, having suggested that second-round effects are beginning to emerge. In an immediate reaction, AUD/USD jumped higher to make a session peak at 0.7171 (vs trough 0.7135), before then gradually trundling lower soon after. The move lower is potentially a function of traders now taking out bets of future tightening, after three consecutive hikes. Particularly as in the presser, the Governor outlined they now have the policy space to wait and see. Markets currently do not assign much probability to a hike in June, before fully pricing in a hike by September.
JPY was flat for much of the European morning, but is now a touch lower after a recent spike higher in USD/JPY – a move which lacked a fundamental driver. The pair jumped to form a session high at 157.88 (from 157.28), before then immediately paring back towards 157.47. Most recently, a knee jerk lower was seen in the pair, with an aggressive move lower from 157.56 to 157.12, before once again moving back towards 157.50.
CHF is near enough unchanged vs the USD, and incrementally firmer against the EUR; EUR/CHF currently hovers just above its 50-DMA at 0.91554. Some modest pressure was seen in the Swiss Franc after the region’s April inflation report, whereby the M/M metric increased by less than expected, though the Y/Y figure doubled amidst the Iranian war.

Central Banks

RBA hikes its Cash Rate by 25bps as expected to 4.35%; via 8-1 vote (one voted to maintain rate at 4.10%); said inflation likely to remain above the target and risks remain tilted to the upside. DECISION. Board assessed that inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations. It was therefore judged appropriate to increase the cash rate target. The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. Having raised the cash rate three times, monetary policy is well placed to respond to developments. It will do what it considers necessary to achieve that outcome. INFLATION. Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of this increase reflected greater capacity pressures. There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen. There are plausible scenarios where inflation is higher and activity lower than envisaged under the baseline forecast. MIDDLE EAST. A longer or more severe conflict could put further upward pressure on global energy prices; this would push up near-term inflation and could also increase inflation further out as these costs are passed through and if price rises get built into longer term inflation expectations.
RBA Governor said if second round effects move through to expectations it could result in a need for higher rates. Current cash rate is a “bit” restrictive, provides some space to see how the Middle East situation develops. Have the policy space to wait and see. Extensive debate about the decision to hike.

Fixed Income

A contained morning for USTs and Bunds given ongoing APAC holidays and after the significant bearish action seen on Monday amid energy upside of as much as USD 6/bbl in Brent.
Gilts, unsurprisingly, lag with downside of 84 ticks at most to an 86.19 base, taking out the 86.36 low from Friday and now looking to the figure and then the 85.90 contract trough. Underperformance is a function of Gilts playing catch-up after Monday’s holiday, similar action seen in the FTSE 100. Otherwise, the UK docket is light, and the benchmark will likely conform directionally to peers, and as such may well retrace some of the discussed downside, in a similar fashion to peers late-Monday.
For the UK, we continue to count down to Thursday’s local elections, the results of which could be the tipping point against PM Starmer, particularly if his own council (Camden) shifts against Labour as the latest polls indicate it might, in a pivot to The Greens. On the leadership, The Times reports that Labour MPs are discussing plans to demand Starmer set a resignation date, in a move akin to that taken by allies of Brown against Blair.
USTs are currently a few ticks firmer in 110-05+ to 110-12 parameters, at the lower end of Monday’s 110-00+ to 110-26+ band. Ahead, a number of data points of note alongside remarks from Fed’s Bowman and Barr. However, there is every chance that action is once again dominated by geopolitics.
Bunds are a few ticks lower in a narrow 124.85 to 125.03 band, similarly at the lower end of Monday’s 124.68 to 125.51 confines. Specifics for the bloc light thus far, though we do look to a text release from ECB’s Lane; however, the topic is focused on the climate, rather than monetary policy.
Alphabet (GOOGL) commences a six-part EUR-denominated bond offer.
Germany sells EUR 0.993bln vs exp. EUR 1.0bln 2.10% 2029 and EUR 0.483bln vs exp. EUR 0.5bln 2.50% 2035 Green Bunds.

Commodities

Crude in the red, as energy generally eases off the highs printed on Monday, where Brent briefly posted gains in excess of USD 6/bbl at a USD 115.30/bbl peak, a conflict high for the July contract. As it stands, Brent is below USD 113.00/bbl, but remains markedly clear of the week’s USD 106.60/bbl open.
Overnight, specifics were bullish for energy, but the magnitude of Monday’s move meant the space failed to benefit. In brief, US President Trump said the conflict could continue for another three weeks, and time is not of the essence. Furthermore, a Fox report suggests the US is closer to resuming combat activity vs 24hrs prior. From the Iranian side, reports around recent strikes and who knew in advance point to ongoing or even further fractures within the leadership.
Dutch TTF in-fitting, lower and holding around EUR 47.70/MWh vs a EUR 49.23/MWh peak on Monday; however, this left it markedly shy of recent levels, which run as high as EUR 73.41/MWh
Spot gold firmer, benefitting from lower energy prices and the respite it has provided to the USD. XAU peaked at USD 4558/oz just after the European cash equity open and remains in proximity to its best levels. Ahead, Fed speak, and US data dominate from a scheduled perspective.
Base metals firmer on the return of LME, following the broader risk tone, though with mainland China still away, the magnitude is limited thus far. 3M LME Copper firmer and back above USD 13k.
Glencore (GLEN LN) confirms that an incident occurred earlier today at the zinc smelting unit of the Ust-Kamenogorsk Metallurgical Complex.
Iraq is offering term buyers discounts of USD 33.40/bbl on Basrah Medium for May loading, Bloomberg reported citing a 3rd of May notice.

US Event Calendar

8:30 am: United States Mar Trade Balance, est. -60.95b, prior -57.3b
9:45 am: United States Apr F S&P Global US Services PMI, est. 51.3, prior 51.3
9:45 am: United States Apr F S&P Global US Composite PMI, est. 52.1, prior 52
10:00 am: United States Apr ISM Services Index, est. 53.7, prior 54
10:00 am: United States Mar New Home Sales, est. 652k
10:00 am: United States Mar JOLTS Job Openings, est. 6850k, prior 6882k
10:00 am: United States Fed’s Bowman Speaks at Washington Financial Symposium
12:30 pm: United States Fed’s Barr Speaks on Banking Regulation

DB’s Jim Reid concludes the overnight wrap

As those in the UK return from the May Bank Holiday, global market sentiment has made a cautious start to the week, with renewed attacks in the Gulf casting doubt on the state of the four-week-old ceasefire between the US and Iran as both the sides look to exert influence over the Strait of Hormuz. Amid the heightened tensions, Brent crude rose +5.80% on Monday before edging -1.18% lower to $113.09/bbl this morning. An ensuing global bond sell-off saw 10yr Treasury yields (+6.8bps) reach a 9-month high of 4.44%, while 30yr yields moved back above 5%. The S&P 500 (-0.41%) also slipped from Friday’s record highs, and while S&P futures are edging +0.13% higher overnight, the Asian markets that are trading today are overwhelmingly in the red.

Markets have faced a flurry of Middle East headlines since Sunday night. The most sustained negative reaction came just before the European close yesterday as the UAE came under missile attacks for the first time since the ceasefire began on April 8, with a fire also breaking out at its oil terminal in Fujairah following a drone attack. The latter has been of increased importance to oil markets as the UAE has been transporting close to 2mmb/day of oil via pipeline to the Fujairah port while Hormuz shipping has been disrupted. Meanwhile, the US military said it had fought off attacks from Iranian drones, missiles, and small boats, as two US warships crossed the Strait of Hormuz along with two US-flagged merchant vessels. That move followed Trump’s announcement on Sunday of “Project Freedom” to help stranded vessels exit the Persian Gulf, though the exact scope of this operation remains unclear. Trump posted yesterday that Defense Secretary Hegseth will be holding a press conference today together with the chairman of the Joint Chiefs of Staff, General Caine. From Iran’s side, Foreign Minister posted last night that “events in Hormuz make clear that there’s no military solution to a political crisis”, while also suggesting that talks with the US were “making progress”.

Earlier yesterday, Iran’s military had warned that the strait remains closed, with reports of a couple of ships coming under attack. Oil prices spiked after Iranian media reported that its missiles had struck a US naval ship, but this move reversed after denials by the US and follow-up Iranian reporting of a “warning shot”. However, the relief proved short-lived and by the close, Brent crude rose +5.80% to $114.44/bbl, having traded below $106/bbl at Monday’s open in Asia. WTI rose +4.39% to $106.42/bbl. Oil markets also moved to price rising risks of persistent disruption, with 6-month Brent futures (+5.25%) posting their largest daily increase since March 2022 to reach a new post-2022 high of $91.99/bbl.

While oil prices pulled back a bit overnight, equity markets in Asia are pulling back from gains in the previous session. As I check my screens, the Hang Seng (-1.16%) is underperforming after a +1.24% rise yesterday, while the S&P/ASX 200 (-0.44%) also sliding following the RBA’s rate decision (details below). Meanwhile, markets in Japan, China and South Korea are closed today.

In term of yesterday’s moves, the rise in oil prices reignited concerns about inflationary pressures, with the 2yr inflation swap in the US rising +6.0bps to 3.13%, the highest since November 2022. In turn, that led to hawkish central bank repricing and pushed yields higher. Fed funds futured moved to price 17bps of hikes by next April (+11.5bps on the day), despite New York Fed Chair Williams arguing that the Fed will need to lower rates “at some point” if inflation drops to the 2% target as he expects for 2027. 2yr Treasury yields rose +7.4bps to 3.95%, while 10yr yields were up +6.8bps to 4.44% and 30yr yields +5.6bps to 5.01% as both reached their highest levels since July last year.

The higher oil and rates backdrop weighed on equities, with the S&P 500 retreating by -0.41% from Friday’s record high in a broad-based decline that saw 70% of S&P constituents lower on the day. Industrials (-1.17%) and materials (-1.57%) stocks led the decline, while energy (+0.85%) stocks were the only major sector to advance. Tech stocks also showed some resilience, with the NASDAQ (-0.19%) and the Mag-7 (+0.04%) little changed on the day. With tech stocks leading strong Q1 earnings growth in the US, the S&P 500 is +13.5% above its low on March 30, even as Treasury yields and longer-dated oil futures have reached new post-Iran war highs. For more on the earnings season takeaways, see yesterday’s update by our US equity strategists here.

Over in Europe, equities struggled even more, with the STOXX 600 falling -0.99%, while DAX (-1.24%), CAC (-1.71%) and FTSEMIB (-1.59%) posted even larger declines. The STOXX Autos index (-1.94%) underperformed, with the likes of Mercedes-Benz (-3.35%), Volkswagen (-2.81%) and BMW (-2.44%) sliding. This followed Trump’s threat on Friday to increase tariffs on auto imports from the EU back up to 25% as he claimed that the EU was “not complying” with the trade deal reached last summer.

European bonds mostly matched the US moves, with 10yr bund yields rising by +5.0bps to 3.08%, while OATs (+6.3bps) and BTPs (+7.8bps) saw larger increases amid the risk-off-tone. And the rise was larger at the front-end, with 2yr bund yields rising +7.8bps as markets moved to price a 99% likelihood of a June ECB hike by yesterday’s close. Adding to the baseline view of a June ECB hike, Germany’s Nagel said that the ECB would need to hike rates in June “if the inflation outlook does not improve markedly”, echoing similar comments he made last Friday.

On the data front, solid US data continued, with March factory orders jumping by +1.5% (vs. +0.6% expected) amid surging demand in segments related to the AI build out. Meanwhile, the Fed’s Q2 Senior Loan Officer Survey showed mostly stable bank credit conditions despite the Iran energy shock, albeit with a marginal tightening for corporate lending.

Turning back to overnight news, in Australia the RBA has hiked rates for a third meeting in a row to 4.35% as we go to print. The decision came in a hawkish-leaning 8-1 vote, a much more decisive split than the 5-4 vote in March, though the RBA’s press release does suggest a degree of patience moving forward as “Having raised the cash rate three times, monetary policy is well placed to respond to developments”.

Sweden’s Riksbank and Norway’s Norges this Thursday will finish up the current round of G10 rate decisions. There will also be lots of Fed and ECB speakers following their meetings last week. See the full day-by-day schedule below.

In terms of the rest of this week’s events, the main highlight will be the US jobs report on Friday. Our economists see payrolls rising +50k in April, close to the breakeven rate and down from +178k in March, with a slightly faster earnings growth rate (+0.3% vs +0.2% in March) and a stable unemployment rate (4.3%). Other US labour market indicators will include the JOLTS survey today and the ADP report on Wednesday. We will also get the ISM services index today and the University of Michigan’s consumer survey for May on Friday. And tomorrow will see the quarterly US Treasury refunding announcement. Our rates strategists preview the event here along with their forecasts.

Elsewhere, we will see the final May services PMIs from China and Europe tomorrow, while European releases also include April CPI reports in Switzerland (Tuesday) and Sweden (Wednesday), as well as March industrial production, factory orders, and trade in Germany. In politics, the focus will be on the local elections in the UK on Thursday. 

Finally, this week’s earnings schedule includes AMD and CoreWeave on the tech side and big consumer stocks Walt Disney and McDonald’s. In Europe, earnings releases include Shell, Leonardo, Ferrari and AB InBev. In Japan, the list includes Toyota, Sony and Nintendo.

Summary

Contradictory statements out of Tehran on UAE attack, amid reports of division between IRGC & civilian leaders.

Two US Navy destroyers transited the Strait of Hormuz and entered the Persian Gulf.

Iranian Foreign Minister Abbas Araghchi travels to Beijing to discuss crisis with Chinese counterpart.

Araghchi: “Events in Hormuz make clear that there’s no military solution to a political crisis.”

Will WTI Crude Oil (WTI) hit (HIGH) $130 in May?
Yes 27% · No 74%
View full market & trade on Polymarket

*  *  *

Internal Iranian Schism Over Monday UAE Attacks(?)

There’s a lot of chatter that Iran’s civilian government and the IRGC are at direct odds over Monday’s attack on UAE, which resulted in a large blaze at the Fujairah oil facility and the three injured Indian nationals. Al Jazeera for example observes:

By targeting the facility, Iran is sending a direct message to UAE saying: “We can target your most important economic points even if you think you can get around the Strait of Hormuz,” said Turak.

Iran’s government has not confirmed or denied responsibility for the attack. Turak noted there are “quite contradictory” statements coming out of Iran, however.

And Saudi-funded Iran International claims the following dramatic schism and internal rupture over the risky cross-Gulf operation, which could signal the end of the ceasefire (though curiously President Trump himself has not said it is broken):

Exclusive information obtained by Iran International points to a growing clash between Iran’s President Masoud Pezeshkian and its military leadership over Monday’s escalation in the Persian Gulf and attacks on the United Arab Emirates.

According to sources familiar with Tehran’s deliberations, Pezeshkian has expressed strong anger at actions by the Islamic Revolutionary Guard Corps, led by Ahmad Vahidi, describing missile and drone strikes on the UAE as “completely irresponsible” and carried out without the government’s knowledge or coordination.

Pezeshkian is said to have described the IRGC’s approach to escalating tensions with regional countries as “madness,” warning of potentially irreversible consequences.

This certainly isn’t the first time that Iran International, a London-based publication seen as also ‘close’ to Israeli intelligence, has alleged severe internal division in Iran’s wartime decision-making, but the viewpoint is beginning to be echoed and reported on more broadly.

Pentagon slide in Tuesday’s briefing showing Iranian attacks on Hormuz shipping: “Iran has fired at commercial vessels nine times and seized two container ships since the ceasefire was announced” (Gen. Caine).

Two US Navy Destroyers Successfully Transit Strait

To review of Monday’s major escalation, US Central Command said its forces had intercepted missiles targeting US Navy and commercial vessels, and also said American helicopters sank six small Iranian boats that officials said were targeting civilian vessels under American protection.

And also came a big milestone in terms of Washington aims to enforce Trump’s newly announced Project Freedom plan to provide military escort for ships through Hormuz. Two US Navy destroyers transited the Strait of Hormuz and entered the Persian Gulf on Monday and overnight after navigating an Iranian barrage, according to defense officials.

CBS reports, “The USS Truxtun and USS Mason, supported by Apache helicopters and other aircraft, faced a series of coordinated threats during the passage, the defense officials said. Iran launched small boats, missiles and drones against them in what officials described as a sustained barrage.” The report underscores further that “Despite the intensity of the attacks, neither U.S. vessel was struck.”

Apaches, Centcom handout

‘No Military Solution’

Iranian Foreign Minister Abbas Araghchi has issued an interesting statement decrying Trump’s attempt at escalation in Hormuz, warning that there’s no “military solution” to the crisis, while warning the US, UAE, and other regional countries against being drawn into a “quagmire” in the region.

“Events in Hormuz make clear that there’s no military solution to a political crisis,” Araghchi wrote on X. “As talks are making progress with Pakistan’s gracious effort, the US should be wary of being dragged back into quagmire by ill-wishers. So should the UAE. Project Freedom is Project Deadlock,” to top Iranian diplomat asserted.

Also of note is that Araghchi will travel to Beijing on Tuesday for discussions with his Chinese counterpart. “During the visit he will meet his Chinese counterpart [Wang Yi] to discuss bilateral ties and regional and international developments,” Iran’s Foreign Ministry said in a statement.

Below: Graham says you either pay now or you pay later. “They tried to get a nuclear weapon. If you don’t believe that, you shouldn’t be allowed to drive.”

Lindsey Graham says Americans deserve higher gas prices because many doubted Iran was going to get a nuclear weapon.

Graham says you either pay now or you pay later.

“They tried to get a nuclear weapon. If you don’t believe that, you shouldn’t be allowed to drive.” https://t.co/1dDx1PVACv pic.twitter.com/Uma2pETYt7

— Shadow of Ezra (@ShadowofEzra) May 5, 2026

Officially at least, Beijing has a policy of “noninterference” in other countries’ internal affairs, and has claimed to not be involved in the Iran conflict – while Washington has consistently accused China of providing intelligence to Tehran, and even possibly military hardware or weapons.

Elsewhere in the region, South Korea’s presidential secretary Choi Soung-ah says “the safety of international maritime routes and freedom of navigation should be protected under international law” and that Seoul is “watching President Trump’s remark related to this,” according Reuters. This after ann explosion and fire on a South Korean-operated ship in the Strait of Hormuz on Monday, which Trump blamed on an Iranian attack.

More Geopolitical Developments

via Newsquawk…

 US President Trump said Iran war could go on for another two to three weeks; time is not of the essence.
IRGC military source told Tasnim that the US shot two small boats carrying civilians instead of shooting IRGC speedboats.
“Iranian Defense Council member Ali Akbar Ahmadian: Our security does not accept negotiations, and Washington obstructed global navigation and energy security”, Al Jazeera reported.
Iranian President Pezeshkian has requested an immediate and emergency meeting with Supreme Leader Khamenei to ask him to stop IRGC attacks on Persian Gulf nations and prevent a recurrence, Iran International reported.
Pezeshkian reportedly outlined that the IRGC attack on the UAE occurred without the knowledge of the government.
US intelligence suggests strikes from the start of the war led to limited new damage to Iran’s nuclear programme, Reuters sources say.
US State Department official to Al Jazeera said the President is clear that direct communication between Israel and Lebanon is the best path toward peace; We are working to prepare the necessary conditions and political momentum to move forward with this
Two US Navy destroyers transited the Strait of Hormuz and entered the Persian Gulf after navigating an Iranian barrage, according to defense officials who spoke to CBS News; “Iran launched small boats, missiles and drones against them”.
Maersk (MAERSKB DC) said its subsidiary’s US-flagged vehicle carrier, Alliance Fairfax, exited the Gulf via Strait of Hormuz on May 4th.
US Treasury Secretary Bessent had a “fierce row” with UK Chancellor Reeves last month over her outspoken criticism of the Iranian war, FT sources say.
US CENTCOM posted “US warships and aircraft deployed to the Middle East are enforcing the naval blockade against Iran while executing Project Freedom to support the free flow of commerce through the Strait of Hormuz.”.
US officials say military closer to resuming combat operations than 24 hours ago, Fox reported.
US President Trump reiterates he feels Europe has been “very disappointing”.
Iranian Foreign Minister Araghchi posted “As talks are making progress with Pakistan’s gracious effort, the US should be wary of being dragged back into quagmire by ill-wishers. So should the UAE.”.
Full post:”Events in Hormuz make clear that there’s no military solution to a political crisis. As talks are making progress with Pakistan’s gracious effort, the U.S. should be wary of being dragged back into quagmire by ill-wishers. So should the UAE.Project Freedom is Project Deadlock.”.
Mehr News Agency said a fire broke out in two commercial ships and spread to two others in Dayyer port south of Iran; cause not clear.
“Explosions were heard tonight in the port of Bandar Abbas (Iran) and on Qassem Island (Iran) in the Persian Gulf”, N12 journalist reported citing sources in Iran.
IRGC political deputy said traffic in the Strait of Hormuz will only be done with Iran’s permission, ISNA reported; “Any kind of traffic in the Strait of Hormuz, if it is from the enemy, will be met with a decisive and crushing response”.
Iranian Parliamentary Speaker Ghalibaf said the new equation of the Strait of Hormuz is being solidified.
Actions of the US and allies have threatened the security of shipping and energy.
UNSC resolution prepared by the US, Saudi Arabia, Bahrain, Qatar, the UAE, and Kuwait opens the door for potential enforcement measures, AsharqNews reported citing the resolution “to be distributed tomorrow”.

Michael Burry has exited his position in GameStop Corp., saying the retailer’s reported bid for eBay Inc. changed the investment case, according to Bloomberg.

In a Monday post to his Substack subscribers, Burry said a potential $56 billion cash-and-stock acquisition would likely require too much debt and no longer aligned with his original thesis for GameStop. He had previously backed the company in 2019, a move that helped spark investor enthusiasm around the stock.

Burry wrote: “Wall Street does indeed mistake debt for creativity, and does so constantly. I of all people should have known.”

GameStop reportedly offered $125 per eBay share — a deal far larger than GameStop itself. 

Burry’s decision comes after a bizarre interview between Gamestop CEO Ryan Cohen and CNBC yesterday morning that deepened doubts around GameStop Corp.’s proposed $56 billion bid for eBay.

Andrew Ross Sorkin presses Ryan Cohen live on how GameStop $GME could realistically fund a potential acquisition of eBay $EBAY pic.twitter.com/vfOZutqiuh

— 𝔇𝔞𝔫𝔧𝔞 🏴‍☠️ (@0xDanja) May 5, 2026

In the 16-minute Squawk Box appearance, Cohen struggled to clearly explain how GameStop would fund a deal worth nearly five times its own market value.

Pressed by Andrew Ross Sorkin over a reported $16 billion financing gap, Cohen leaned on vague responses, pointing to the company’s website and repeating that the offer was “half cash, half stock.”

He noted GameStop had roughly $9.4 billion in cash and cited a financing letter from TD Securities for up to $20 billion, but failed to fully address how the numbers added up.

The interview grew more tense as CNBC hosts Becky Quick and Michael Santoli pressed Cohen on dilution concerns and the strategic logic behind the acquisition. Cohen argued the deal would help GameStop better compete with Amazon and said his incentives are tied to shareholder performance.

Clips of Cohen’s pauses, evasive answers, and uneasy body language quickly spread online as shares fell and investors questioned whether the takeover bid was realistic.

Bloomberg writes that Burry also noted that this was his first stock sale since launching his newsletter. Separately, he disclosed a new bearish bet against the semiconductor sector through put options on the iShares Semiconductor ETF and said he significantly increased his stake in Lululemon.