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Stronger growth, stronger jobs and softer inflation: US data delivered a Goldilocks combination, but investors struggled to celebrate. Treasury yields climbed, with the US 10-year reaching 5.30%, weighing on the S&P 500 while the Nasdaq 100 held positive.
Can AI earnings keep offsetting the pressure from rising yields? Micron delivered another strong earnings beat and upbeat revenue guidance, while HPE raised its networking growth outlook and announced a $1.2bn order from Vultr. Meanwhile, an FTC investigation into OpenAI and Anthropic adds another risk to the AI story.
Across Europe, accelerating inflation strengthens expectations of further ECB tightening, yet the euro...

The AI party is still on, but the foundations are cracking. Oil fell more than 5%, yet long-term US yields kept rising, the dollar strengthened and equities remained under pressure. Weak job openings and consumer confidence offered little comfort as investors grappled with inflation, debt and increasingly expensive borrowing.
Attention now turns to US growth, jobs and inflation data. Strong activity could reinforce Fed hike expectations; weaker activity with stubborn inflation would leave markets facing a much less comfortable combination.
Then comes Micron. Expectations are enormous, and a strong earnings beat may not be enough: guidance must convince investors that...

Oil prices and global yields continue to rise, putting pressure on equity valuations and supporting the US dollar. But beneath the move in US Treasuries, an interesting divergence is emerging. The 10-year breakeven inflation rate remains broadly stable around 2.3%, while real yields have risen sharply. This suggests that resilient US growth, increasingly hawkish Fed expectations and a higher real term premium – partly linked to heavy government borrowing – are playing an important role in pushing yields higher.
Meanwhile, the US yield curve continues to flatten as the 2-year yield rises faster than the 10-year, raising fresh questions about...

Oil prices and global bond yields are rising again, putting investors in front of some difficult choices. Sovereign yields are becoming increasingly attractive, but structurally higher inflation could push them even further. Meanwhile, the S&P 500 has become materially cheaper despite trading higher, as strong earnings growth has driven significant multiple compression and lifted the forward earnings yield to around 5.2%.
This week, US inflation and labour-market data will test increasingly hawkish Fed expectations, while European inflation releases will shape the outlook for the ECB. In corporate news, Micron earnings will provide another major test for the AI trade, where...