• Markets edge lower as bond yields rise - Equity markets pulled back modestly on Monday as bond yields extended their recent move higher. Sector performance was mixed, with energy leading gains, supported by higher oil prices, while the technology and industrial sectors lagged. Internationally, Asian markets finished mostly lower overnight, while European markets advanced. In energy markets, WTI oil traded higher amid continued disruptions in the Strait of Hormuz. Meanwhile, the U.S. dollar weakened against major currencies after posting solid gains last week.
   
• Bond yields extend move higher – Government bond yields have risen across major developed markets, including those in the U.S., Japan, France, the U.K. and Germany. In the U.S., the move partly reflects concerns that inflation could remain elevated for longer, particularly if higher oil prices feed through to broader price pressures. This has reduced confidence that the Federal Reserve (Fed) will be able to cut rates in the near term. Markets are now pricing in the possibility that the Fed's next move could be a rate hike rather than a cut, potentially sometime next year. Inflation expectations — a key component of bond yields — have also risen. Market-implied 10-year inflation expectations in Treasury Inflation Protected Securities (TIPS) markets have climbed to about 2.5%, accounting for about half of the recent rise in 10-year Treasury yields. We think policymakers will remain on the sidelines in the near term with the Fed's preferred core Personal Consumption Expenditures (PCE) inflation gauge running at 3.2% — still well above the 2% target. Recent energy-price pressures further complicate the case for rate cuts. At the same time, we think a steady labor backdrop gives policymakers room to remain patient and assess whether inflation pressures will prove temporary and when they may begin to ease.
   
• Focus shifts to NVIDIA as strong earnings season winds down – Attention will soon turn to artificial intelligence (AI) chip giant NVIDIA, which is scheduled to release quarterly results on Wednesday. Consensus estimates call for earnings per share of $1.75, representing growth of 116% from the same quarter a year ago. Given NVIDIA’s central role in the AI investment theme, its results and guidance could have an outsized impact on technology sentiment and broader market leadership. More broadly, earnings have continued to come in well ahead of expectations. About 84% of companies have beaten EPS estimates by an average upside surprise of 18%. This outperformance has driven a significant upward revision to earnings-growth estimates, with EPS tracking at 26%, compared with 12% at the end of the quarter. If sustained, this would mark the sixth straight quarter of double-digit earnings growth. We believe these strong results demonstrate that fundamentals remain supportive of equity markets, even as inflation and interest-rate risks remain near-term headwinds. Technology continues to lead earnings growth, with EPS up more than 50% year-over-year, while communication services and materials are also posting robust EPS gains of more than 40% from a year ago. With 10 of the 11 sectors posting year-over-year EPS gains, growth has also been broad-based. We believe wide earnings growth should help support more balanced market performance across sectors, help reduce reliance on a narrow group of market leaders, and help strengthen the case for portfolio diversification.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Stocks pull back from record highs as yields rise and tech rally stalls - Major equity indexes finished broadly lower today, weighed down by profit-taking in technology following a sharp rally over the past month, alongside a rise in government bond yields amid renewed inflation concerns. Developments from the Trump–Xi summit in China suggest an extension of the current trade truce, though without any major breakthroughs or material updates, including on Iran. The tone of discussions was constructive, reducing the risk of further tariff escalation, with reports indicating a potential new Board of Trade mechanism aimed at boosting bilateral trade, initially focused on roughly $30 billion of nonsensitive goods. Beyond this, however, there were no developments significant enough to shift the broader narrative around U.S.–China relations. In rates, the two-year Treasury yield rose to 4.08%, while both oil prices and the U.S. dollar moved higher. Energy was the only sector higher, while materials was the worst performer.
   
• Bond markets under pressure amid rising oil prices - Risk sentiment was dented today by a global rise in bond yields, driven by a combination of inflation concerns, rising expectations for central-bank rate hikes, and growing worries around government debt as countries look to cushion the impact of higher energy prices. U.S. 30-year Treasury yields are at their highest level since 2007. Japan’s 30-year yield has reached 4% for the first time since 1999, while political uncertainty in the U.K. has pushed 30-year gilt yields to a 28-year high. Following a week of elevated inflation readings, including U.S. producer prices rising at the fastest pace since 2022, markets are now pricing in roughly a two-thirds probability of a Fed rate hike in December. While central banks cannot directly resolve a global energy shock by hiking interest rates, the prospect of fiscal stimulus appears to be complicating the inflation outlook. Measures such as a potential U.S. gas tax holiday, relief efforts in Japan, and increased public spending in the U.K. are beginning to weigh on bond investor sentiment. In recent months, equities and bonds have responded to divergent narratives. Equity markets have been supported by a technology-led rally and strong earnings, while bond markets have focused more on inflation risks, higher oil prices, and policy uncertainty. The recent rise in yields may be approaching levels that begin to weigh on equity performance. That said, we continue to believe the Fed will avoid overreacting to what may prove to be a temporary energy-driven inflation shock. Prior to the conflict, global oil supply was exceeding demand, and when conditions normalize in the Strait of Hormuz, oil prices are likely to retrace toward prior levels.
   
• Spotlight on NVIDIA as earnings season wraps up - AI remains a key engine of growth, with sustained investment supporting earnings momentum across sectors and reinforcing expectations for continued profit expansion. NVIDIA, whose chips are central to the AI buildout, is set to report earnings next week. With the company now accounting for nearly 9% of the S&P 500, both results and forward guidance will be closely scrutinized by investors. U.S. earnings season is drawing to a close, with roughly 90% of S&P 500 companies having reported. The overall takeaway is broadly positive, with results coming in well above expectations. This outperformance has driven a meaningful upward revision in earnings growth, with EPS now tracking near 26%, up from roughly 12% at the end of the quarter. These results help reinforce the view that corporate profits remain a key driver of equity market returns, helping offset a modest compression in valuations this year and providing a counterbalance to ongoing geopolitical uncertainty. We think that as long as earnings momentum remains strong, investors have good reason to avoid becoming overly negative and to look through, rather than react to, day-to-day headline noise.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg, FactSet.}

• Markets hit new highs – Major U.S. equity markets continue to rally, helped by enthusiasm over AI related stocks and solid consumer spending data. The Dow Jones Industrial Average index pushed back above the 50,000 marker it hit back in February, while the Nasdaq and S&P 500 index both hit record highs today, underpinned by strong performance in the technology sector. This upbeat sentiment helped push the market capitalization of Nvidia to near $6 trillion, while Cerebras Systems, an AI infrastructure company, soared 75% after its initial public offering. In other markets, oil was broadly flat over the day at $102 per barrel as investors continue to watch for further signs of progress in unlocking the important energy supply route through the Strait of Hormuz. Bonds rallied at the start of the session but sold off as the day progressed, particularly at the short end, with the 2-year yield rising above 4% for the first time in more than a year. Finally, the dollar appreciated against a trade-weighted basket of currencies, and gold prices were a touch softer.
   
• Keep calm and carry on spending – Today's retail sales data point to further signs of resilience from U.S. consumers in the face of the latest inflation shock. Headline sales were up for a third consecutive month, with spending in nominal terms rising 0.5% over April. Admittedly, this jump partly reflects higher prices, especially for gas, with the consumer price index rising 0.6% over the month. Still we think the resilience of spending in the face of this shock has been impressive, and we are seeing few signs of consumers cutting back on other types of spending as costs at the pump increase. Indeed, excluding sales at gas stations, spending was up 0.3% month-over-month in this report, and through March and April this type of spending is up 6% in annualized terms. Larger tax refunds are likely supporting this strength in our view, alongside a solid labor market, with today's initial unemployment insurance claims reading still at low levels. It is possible this resilience could be tested by a more prolonged spike in inflationary pressures. However, absent a more severe energy price shock, we think the U.S. consumer looks in good shape to continue spending.
   
• Investors continue to watch Trump-Xi summit – President Trump's state visit to China remains in focus for markets, as investors look for signals around trade policy, the next steps in the Iran conflict, and U.S. policy over Taiwan. The leaders of the world's two superpowers met in closed-door talks yesterday, with Chinese state media reporting that Xi had warned the U.S. its stance over Taiwan could lead to "clashes" and a "highly dangerous situation." However, the tone of today's meetings, which included a range of U.S. business leaders, sounded more upbeat, with Xi signaling a desire to further open up the Chinese economy to international companies and talking positively of the benefit of economic ties between China and the U.S. President Trump also talked up the prospects for a fantastic future between the two countries. It will be interesting to see if this positive rhetoric is followed by news of agreements around tariffs or trade deals after the trip. From a geopolitical perspective, President Trump said that Chinese President Xi would not supply Iran with military equipment, and offered to help the U.S. secure a peace agreement that would reopen the Strait of Hormuz.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg, FactSet.}

• Markets close higher despite hotter-than-expected inflation – Equity markets closed higher on Wednesday even after a producer price inflation (PPI) report came in above estimates, suggesting investors remain focused on resilient growth and strong corporate earnings. As widely expected, Kevin Warsh was confirmed by the U.S. Senate to become the next Federal Reserve chair, succeeding Jerome Powell, who will remain on the Fed Board for now. Bond yields rose, with the 10-year Treasury at 4.47%, likely reflecting some sensitivity to the inflation data and the likelihood that the Fed may need to keep its policy rate steady for longer. Internationally, Asian markets finished mostly higher as investors there likely focused on the Trump-Xi meeting that started today. Meanwhile, the U.S. dollar strengthened against major currencies, consistent with higher bond yields and a less-dovish interest-rate backdrop.
   
• Producer price inflation rises more than expected – Producer price index (PPI) inflation accelerated to 6.0% year-over-year in April, above forecasts for 5.0%. Similar to Tuesday's CPI report, elevated oil prices were a major driver, with energy prices up about 22% from a year earlier and accounting for much of the headline increase. Core PPI, which excludes food and energy, also surprised to the upside, rising to 5.2% year-over-year, compared with estimates of 4.3%. Gains in trade services prices suggest tariffs may be having a larger impact as well. From a corporate earnings perspective, higher input costs could create profit-margin pressure unless businesses can pass along higher costs to consumers. That said, much of the impact appears tied to energy-related price increases, which should prove temporary, assuming oil prices retreat as supply disruptions ease.
   
• Strong earnings season in the home stretch – With about 91% of S&P 500 companies reporting, earnings continue to come in well above expectations. About 84% have beaten EPS estimates by an average upside surprise of 19%. That outperformance has driven a significant upward revision in earnings growth estimates to 26%, compared with 12% at the end of the quarter. If sustained, this would mark the sixth straight quarter of double-digit earnings growth. We believe these strong results demonstrate that fundamentals remain supportive of equity markets, even as inflation risks remain near-term headwinds. Technology is leading earnings growth, up more than 50% year-over-year, reflecting demand from artificial intelligence and cloud-computing infrastructure. Communication services and materials are also posting robust EPS gains of more than 40% from a year ago. With 10 of the 11 sectors posting year-over-year EPS gains, growth has also been broad-based. We believe wide earnings growth should help support more balanced market performance across sectors, help reduce reliance on a narrow group of market leaders, and help strengthen the case for portfolio diversification.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}

• Markets close lower as inflation comes in slightly hotter than expected – Equity markets pulled back on Tuesday as investors weighed an inflation report than modestly exceeded expectations. Sector performance was mixed, with health care and consumer staples leading gains, while consumer discretionary and technology lagged, reflecting a risk-off tone. Bond yields moved higher, potentially reflecting the view that the Fed may remain on the sidelines for longer with inflation elevated. Internationally, Asian markets finished mostly lower overnight, and European markets were also down. In energy markets, WTI oil added to recent gains amid continued disruptions in the Strait of Hormuz. Meanwhile, the U.S. dollar strengthened against major currencies, likely supported by higher bond yields.
   
• CPI inflation rises more than expected – Consumer price index (CPI) inflation rose to 3.8% year-over-year in April, modestly above forecasts for 3.7%. Elevated oil prices were a key contributor, with energy prices up nearly 18% from a year earlier and accounting for much of the increase in headline inflation. Core CPI, which excludes the more volatile food and energy categories, edged higher to 2.8% annualized, compared with estimates of 2.7%. Shelter inflation also rose to 3.3%, from 3.0% through March, partly reflecting a semiannual data refresh that compared against a period of no assumed inflation in October 2025 during the government shutdown. With inflation remaining above the Fed's 2% target for more than five years and the labor market stabilizing, we expect policymakers to keep interest rates on hold in the near term.
   
• Employment data points to firmer job growth – U.S. private employers added an average of 33,000 jobs per week for the four weeks ending April 25, up from 30,250 in the prior report, according to ADP. While the pace of hiring remains modest by historical standards, we believe it should be sufficient to sustain near-full employment, particularly as labor-force growth slows due to tighter immigration enforcement and an aging workforce. As a result, we expect the labor market to remain characterized by slower hiring but limited layoffs, which should keep the unemployment rate contained.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}