Intro
In the last two weeks, inflation pressures intensified as the Consumer Price Index rose notably, driven by higher shelter and gasoline costs, while the 30-year Treasury yield reached levels not seen in nearly two decades. Geopolitical tensions and trade developments, including U.S.-China tariff adjustments and concerns about oil supply disruptions, also shaped market sentiment. Let’s dive in!
ClariVise Insights
- CPI Inflation Update: The Consumer Price Index (CPI) rose 0.6% in April 2026, with a 12-month increase of 3.8%. Energy prices rose 3.8% in April, driving much of the monthly increase, while food and shelter costs also showed notable gains. Core inflation (excluding food and energy) increased 0.4% for April and 2.8% annually.
- Treasury Yields Surge: The 30-year Treasury yield hit 5.13%, reaching almost 20-year highs since June 2007, while the 10-year yield rose to 4.59%, the highest since May 2025. Rising yields reflect inflation concerns and hawkish Fed policies, tightening financial conditions globally.
- Factory Production Growth: U.S. factory production rose 0.6% in April, driven by motor vehicles and technology amid an AI spending boom, marking the largest increase in 14 months. However, supply chain disruptions related to the U.S.-Iran conflict pose risks to near-term manufacturing and pricing outlooks.
Other News
- Fed Policy Shift: Markets now see near-zero odds of a 2026 rate cut, with rising chances of hikes by early 2027. This reflects concerns over potential stagflation in the U.S., where inflation remains elevated amid slowing growth and weakening labor conditions.
- Inflation Outlook: Inflation is projected to rise to 6% in Q2 2026, driven by geopolitical tensions and energy prices, with elevated levels persisting through midyear before easing by year-end. Growth forecasts were lowered, with GDP expected at 2.2% for 2026 and unemployment estimated near 4.5%.
- U.S.-China Trade: China and the U.S. agreed in principle to reduce tariffs on select goods and to establish trade and investment councils. They also plan to ease agricultural trade barriers and confirmed agreements on American aircraft sales and related parts supply.
- Historical Market Comparison: The Nasdaq 100’s 140% gain since ChatGPT’s launch in 2022 is modest compared to the dot-com bubble’s 1,090% surge. Unlike the dot-com era’s ultra-high valuations and speculative capital raising, today’s AI leaders grow through internal cash flow with more stable valuations and diversified business models.
- New Fed Chair: Kevin Warsh has been approved by the Senate as the new Federal Reserve Chair, succeeding Jerome Powell. Warsh faces challenges with a divided FOMC and a tough economy, making near-term interest rate cuts unlikely.
- Global Oil Concerns: Global oil inventories are rapidly falling due to Middle East supply disruptions, nearing critical lows that could lead to price spikes and economic impacts if the Strait of Hormuz remains closed, according to the IEA, UBS, JPMorgan, and Rapidan Energy forecasts.
Earnings Spotlight
Planning Points
Mid-Year Financial Check-In
As we move into the middle of 2026, now is a practical time to review your financial goals and progress.
- Evaluate your budget and spending patterns to identify any adjustments needed for the rest of the year.
- Review contributions to retirement accounts, ensuring you are on track to maximize limits if possible.
- Consider how any changes in income, expenses, or life circumstances this year may affect your plan going forward.
- Review liquidity reserves and insurance coverage, including life, liability, and any coverage tied to significant assets, to ensure they reflect your current situation.
A mid-year review helps ensure your plan stays aligned with your goals as circumstances evolve. If now feels like a good time to revisit your plan, we would be glad to connect.
Summary
Over the next two weeks, markets will focus on upcoming GDP, corporate profits, consumer spending, and trade data as investors continue evaluating the strength of the economy and the path of future Fed rate decisions. U.S. markets will be closed Monday for Memorial Day, and investors will continue monitoring tensions with Iran and disruptions in the Strait of Hormuz for their impact on oil prices and energy costs. Have a safe holiday weekend!
Footnotes
- CPI for all items rises 0.6% in April; shelter and gasoline up (BLS)
- The 30-year Treasury yield just broke to its highest level in almost 20 years (Yahoo Finance)
- Motor vehicles, AI boost US manufacturing production; supply shortages from war loom (Investing.com)
- Fed Rate Cuts Are Over. Expect Hikes as Stagflation Is Ready to Strike (24/7 Wall St.)
- Inflation rate projected to hit 6% in the second quarter, top economic forecasters say (CNBC)
- China, US agree to reduce tariffs on some goods– China Commerce Ministry (Investing.com)
- Why the Nasdaq 100s AI-driven stock boom still looks tame compared to the dot-com era (Yahoo Finance)
- Kevin Warsh Is the New Fed Chair and Rates May Not Drop This Year. Heres What That Means for Your Portfolio. (Motley Fool)
- Global oil stockpiles could hit record lows if Strait of Hormuz remains closed (CNBC)
Disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual
Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). ClariVise Private Wealth, Bluespring Wealth Partners, LLC, Kestra IS and Kestra AS are affiliated through common ownership by Kestra Holdings. Investor Disclosures: https://www.kestrafinancial.com/disclosure
