A volatile month draws to a close, with global bond yields higher as inflation expectations remain elevated. With no sign of the end of the Middle East conflict, investors very much remain on edge. Ongoing concerns regarding A.I. spending are also weighing on sentiment.

U.S. stocks and bonds lost ground last week, with global stock markets all gaining ground. GOOG disappointed, which is hard to digest given their performance and outlook. Investors remained very concerned about A.I. investment needs, especially amongst the hyper-scalers. There are important central bank meetings and earnings this coming week.

Most global bond and stock indices rallied last week, with several global (including U.S.) stock indices closing at record highs. PCE data for April confirmed elevated inflation in the U.S., and the fact that consumers are getting poorer. This is a real contrast with the ever-higher improvement in most global asset prices.

Stocks were fine much of the week due to the ongoing "to the moon" A.I. narrative and rampant momentum buying. However, things came to a screeching halt on Friday, once the "adults in the room" (i.e. bond investors) started to run for cover with inflation soaring higher and becoming ever-more entrenched. Friday was firmly risk off, and now the question is what will happen next week? What if buy-the-dip investors go on strike? I don't even want to imagine that!!

Get ready for the next FOMC meeting and a market rip following the debt ceiling agreement. Want to better understand semiconductors?

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