The dollar and oil prices rose slightly, while US stocks and bonds fell as inflation concerns continued to rise.
2026-05-15 19:23:09
On Friday (May 15), during the European trading session, the Strait of Hormuz standoff pushed up oil prices, further exacerbating inflation concerns. Bond yields rose sharply across the board due to stronger expectations of interest rate hikes. Gold and stocks both declined, while the dollar rose to its highest point in two and a half weeks. Amidst political turmoil in the UK, the pound led the decline among major currencies.
The Strait of Hormuz remains closed, prompting markets to reassess inflation risks.
As the week draws to a close, market risk appetite has cooled significantly. With the Iran issue remaining unresolved, investors are gradually returning to rationality, and the market is facing a real-world test. The highly anticipated meeting between the Chinese and US leaders has concluded, but no clear solution was reached on how to lift the blockade of the Strait of Hormuz, triggering renewed market panic.
Although Iran was not the core topic of the meeting, market reactions suggest that investors had underestimated the seriousness of the situation in the Middle East and were blindly optimistic, partly because they hoped the United States would seek Chinese intervention to mediate.
However, China has consistently maintained an objective and impartial stance, actively promoting peace and stability in the Middle East and playing a constructive role in restoring normal navigation in the Strait of Hormuz. China has clearly stated its intention to leverage its influence to push for the reopening of this crucial oil transport route. However, the lack of a specific timetable has fueled investor anxiety. Furthermore, former US President Trump's statements regarding whether the US has committed to restoring oil and gas transport through the Strait of Hormuz have remained vague and contradictory.
The Iranian nuclear issue and the handling of its uranium stockpile remain the core obstacles to the current deadlock in negotiations. China's position is clear: it consistently adheres to a peaceful resolution of the Iranian nuclear issue through political and diplomatic means, opposes the use of force and illegal sanctions, respects Iran's right to the peaceful use of nuclear energy as a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons, and advocates for curbing the risk of nuclear proliferation. Trump's patience with Iran is likely running out.
His remarks in a media interview have raised concerns that if the relevant issues cannot be resolved in the short term, the United States may restart military strikes against Iran. This statement has further exacerbated the instability of the regional situation. China has always opposed this and advocated resolving differences through dialogue and negotiation.
Oil prices surge, and expectations of interest rate hikes continue to rise.
Oil prices rose again today, with West Texas Intermediate (WTI) and Brent crude futures both gaining more than 3%. More noteworthy is that the market has begun to digest the impact of this week's oil price increases and the stalemate in negotiations, leading to a significant sell-off in Treasury bonds.
On Friday, the yield on the 10-year U.S. Treasury note climbed to 4.55%, a one-year high. Yields on Japanese and British government bonds also rose sharply, with both countries currently facing higher debt risks than other similar economies.
This week's US inflation data, which far exceeded expectations, further exacerbated market panic, with investors anticipating that central banks' tightening policies will be more aggressive than initially expected at the start of the Middle East crisis. Currently, investors believe there is a 50% probability of a Fed rate hike in December; and the market has already fully priced in a 25 basis point rate hike by the European Central Bank and the Bank of England before July.
The renewed surge in yields has dealt a heavy blow to gold, with the precious metal price falling below $4,550 per ounce.
AI Market Trends: Brief Recession or Trend Reversal?
As expected, global stock markets fell across the board on Friday, with US stock futures also joining the decline. The current drop in US stocks is more of a healthy correction than a signal that the AI rally is over—especially given Nvidia's crucial earnings report next week, the market urgently needs a short break before then.
Strong earnings performance in the AI sector and across the board propelled the S&P 500 and Nasdaq indices to their seventh consecutive week of gains. As long as earnings expectations remain robust, the US stock market is expected to cope with one or two more rate hikes by the Federal Reserve. Retail sales data released yesterday showed that despite rising gasoline prices, US consumer spending remained strong in April.
The Japanese yen and British pound performed poorly this week.
However, the outlook for other economies is less optimistic, with several countries facing a continued rise in the risk of stagflation. In Japan, concerns over the energy crisis prevented the Bank of Japan from raising interest rates in April, but the likelihood of a rate hike in June has increased significantly.
Despite this, the yen remains under pressure. Market speculation suggests that Japanese authorities are frequently intervening in the foreign exchange market to prevent the dollar/yen exchange rate from approaching the 160 mark. Currently, the dollar index has climbed to its highest point since the end of April.
The pound performed even worse this week, with a cumulative decline of 2.2%. Political uncertainty has once again plagued the pound's performance, as British Prime Minister Keir Starmer faces numerous governing challenges and growing divisions within his party.
Following Labour's crushing defeat in local and regional elections last week, Starmer has failed to quell calls within the party for his resignation, and the pressure to step down continues to mount.
British Health Secretary Wes Streatine announced his resignation from the cabinet yesterday, but has not yet formally launched a challenge for the party leadership. However, market attention is now focused on the highly popular Manchester Mayor Andy Burnham – the Labour Party member who plans to return to Parliament through the next by-election.
The Labour Party leadership contest is expected to become a protracted stalemate, which may continue to weigh on the pound in the short term, while UK government bond yields may reach new record highs.
The Strait of Hormuz remains closed, prompting markets to reassess inflation risks.
As the week draws to a close, market risk appetite has cooled significantly. With the Iran issue remaining unresolved, investors are gradually returning to rationality, and the market is facing a real-world test. The highly anticipated meeting between the Chinese and US leaders has concluded, but no clear solution was reached on how to lift the blockade of the Strait of Hormuz, triggering renewed market panic.
Although Iran was not the core topic of the meeting, market reactions suggest that investors had underestimated the seriousness of the situation in the Middle East and were blindly optimistic, partly because they hoped the United States would seek Chinese intervention to mediate.
However, China has consistently maintained an objective and impartial stance, actively promoting peace and stability in the Middle East and playing a constructive role in restoring normal navigation in the Strait of Hormuz. China has clearly stated its intention to leverage its influence to push for the reopening of this crucial oil transport route. However, the lack of a specific timetable has fueled investor anxiety. Furthermore, former US President Trump's statements regarding whether the US has committed to restoring oil and gas transport through the Strait of Hormuz have remained vague and contradictory.
The Iranian nuclear issue and the handling of its uranium stockpile remain the core obstacles to the current deadlock in negotiations. China's position is clear: it consistently adheres to a peaceful resolution of the Iranian nuclear issue through political and diplomatic means, opposes the use of force and illegal sanctions, respects Iran's right to the peaceful use of nuclear energy as a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons, and advocates for curbing the risk of nuclear proliferation. Trump's patience with Iran is likely running out.
His remarks in a media interview have raised concerns that if the relevant issues cannot be resolved in the short term, the United States may restart military strikes against Iran. This statement has further exacerbated the instability of the regional situation. China has always opposed this and advocated resolving differences through dialogue and negotiation.
Oil prices surge, and expectations of interest rate hikes continue to rise.
Oil prices rose again today, with West Texas Intermediate (WTI) and Brent crude futures both gaining more than 3%. More noteworthy is that the market has begun to digest the impact of this week's oil price increases and the stalemate in negotiations, leading to a significant sell-off in Treasury bonds.
On Friday, the yield on the 10-year U.S. Treasury note climbed to 4.55%, a one-year high. Yields on Japanese and British government bonds also rose sharply, with both countries currently facing higher debt risks than other similar economies.
This week's US inflation data, which far exceeded expectations, further exacerbated market panic, with investors anticipating that central banks' tightening policies will be more aggressive than initially expected at the start of the Middle East crisis. Currently, investors believe there is a 50% probability of a Fed rate hike in December; and the market has already fully priced in a 25 basis point rate hike by the European Central Bank and the Bank of England before July.
The renewed surge in yields has dealt a heavy blow to gold, with the precious metal price falling below $4,550 per ounce.
AI Market Trends: Brief Recession or Trend Reversal?
As expected, global stock markets fell across the board on Friday, with US stock futures also joining the decline. The current drop in US stocks is more of a healthy correction than a signal that the AI rally is over—especially given Nvidia's crucial earnings report next week, the market urgently needs a short break before then.
Strong earnings performance in the AI sector and across the board propelled the S&P 500 and Nasdaq indices to their seventh consecutive week of gains. As long as earnings expectations remain robust, the US stock market is expected to cope with one or two more rate hikes by the Federal Reserve. Retail sales data released yesterday showed that despite rising gasoline prices, US consumer spending remained strong in April.
The Japanese yen and British pound performed poorly this week.
However, the outlook for other economies is less optimistic, with several countries facing a continued rise in the risk of stagflation. In Japan, concerns over the energy crisis prevented the Bank of Japan from raising interest rates in April, but the likelihood of a rate hike in June has increased significantly.
Despite this, the yen remains under pressure. Market speculation suggests that Japanese authorities are frequently intervening in the foreign exchange market to prevent the dollar/yen exchange rate from approaching the 160 mark. Currently, the dollar index has climbed to its highest point since the end of April.
The pound performed even worse this week, with a cumulative decline of 2.2%. Political uncertainty has once again plagued the pound's performance, as British Prime Minister Keir Starmer faces numerous governing challenges and growing divisions within his party.
Following Labour's crushing defeat in local and regional elections last week, Starmer has failed to quell calls within the party for his resignation, and the pressure to step down continues to mount.
British Health Secretary Wes Streatine announced his resignation from the cabinet yesterday, but has not yet formally launched a challenge for the party leadership. However, market attention is now focused on the highly popular Manchester Mayor Andy Burnham – the Labour Party member who plans to return to Parliament through the next by-election.
The Labour Party leadership contest is expected to become a protracted stalemate, which may continue to weigh on the pound in the short term, while UK government bond yields may reach new record highs.
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