Latest / Key Markets & Headlines / Key Markets & Headlines — Monday, May 18, 2026
Transcript
- Key markets and headlines for today. The single most market-moving story this morning is the ongoing surge in global bond yields, which is threatening to derail the artificial intelligence-driven rally in equities. Thirty-year US Treasury yields have climbed to their highest levels since two thousand seven, while similar-maturity German debt is at a fifteen-year high. This move comes as energy prices continue to rise, with Brent crude oil trading above one hundred ten dollars a barrel. The war in Iran has structurally raised the floor for bond yields, according to portfolio managers at JPMorgan Asset Management, and investors are increasingly worried about persistent inflation. As a result, equities are at risk of a significant pullback, with Morgan Stanley strategists warning that if long-term interest rates keep rising, we could see the first meaningful correction in equity prices since markets bottomed at the end of March. The S&P five hundred has already retreated from its all-time high, and futures are signaling further declines. Still, strategists maintain a longer-term bullish outlook, citing strong earnings growth. Turning to the Federal Reserve, Ed Yardeni of Yardeni Research says the Fed needs to catch up with bond markets or risk losing control of borrowing costs. He argues that the central bank should remove its easing bias at its June meeting, as it is no longer appropriate in the current market environment. If the Fed fails to act, investors may conclude that the central bank is falling behind the inflation curve and will demand a higher inflation risk premium. Yields on thirty-year Treasuries have climbed above five percent and are near their highest since two thousand seven, while two-year yields are around a fifteen-month high. Traders now see a Fed interest-rate increase by March, a shift driven by the Iran war and its impact on the bond market narrative. In commodities, central banks are expected to step up gold-buying, which could help prices recover by year-end. Goldman Sachs analysts predict that central bank purchases will pick up to average sixty tons a month over two thousand twenty-six, with the twelve-month moving average already rising to fifty tons in March. Goldman maintains a bullish target for gold prices to climb to five thousand four hundred dollars an ounce by the end of this year. The World Gold Council estimated central bank purchases at two hundred forty-four tons in the first quarter, up from two hundred eight tons in the prior three months. For central banks, there’s strong underlying interest in gold, with geopolitical developments reinforcing the need for diversification. On the geopolitical front, President Trump has expressed frustration with Iran and warned that the “clock is ticking,” just hours after drones targeted a nuclear power plant in the United Arab Emirates. Trump stated that Tehran “better get moving, FAST, or there won’t be anything left of them.” These fresh threats helped push oil prices higher, with Brent crude climbing around one point five percent to one hundred ten dollars and seventy cents a barrel. The selloff in global bonds has worsened as investors price in faster inflation and raise bets that central banks will be forced to lift interest rates. Earlier on Sunday, a drone sparked a fire at the UAE’s Barakah nuclear plant, underscoring the fragility of the ceasefire in the region. In Japan, Prime Minister Sanae Takaichi has reversed her earlier stance and called for an extra budget in response to rising commodity prices driven by the ongoing Middle East conflict. The planned supplementary budget is expected to fund emergency relief measures and may be financed in part through new debt issuance. This announcement pushed super-long bond yields to fresh record highs, with thirty-year and forty-year government debt surging. For weeks, Takaichi and Finance Minister Satsuki Katayama had denied the need for additional funds or fresh bond issuance, but investors are increasingly concerned about the impact of higher borrowing and fiscal policy on Japan’s debt markets. Shifting to China, the country has agreed to buy at least seventeen billion dollars of agricultural products annually through two thousand twenty-eight and establish boards of trade and investment, following a major summit in Beijing between President Trump and Chinese leader Xi Jinping. The two boards form the cornerstone of this historic agreement, as both sides work to optimize trade between the world’s largest economies. One idea for the trade council is to remove tariffs on about thirty billion dollars worth of commerce for non-critical areas. The seventeen billion dollars in annual Chinese purchases of agricultural products would be in addition to soybean-purchase commitments made last fall. Now, turning to equities and corporate news. Apple, ticker A-A-P-L, is making headlines with its upcoming iOS twenty-seven update, which will introduce privacy features unique to the chatbot market. At the center of the new artificial intelligence experience will be the first standalone Siri app, designed to serve as a repository for past Siri conversations and function as a chatbot similar to OpenAI’s ChatGPT and Anthropic’s Claude. A notable feature is auto-deleting chats, allowing users to choose to keep conversations for thirty days, one year, or forever. Apple is also planning a Genmoji upgrade in iOS twenty-seven to increase usage, with suggested Genmoji created from users’ photos and commonly typed phrases. Adobe, ticker A-D-B-E, is facing a federal lawsuit alleging that it used the voices of seven journalists and podcasters to train artificial intelligence models without their consent. The plaintiffs include Pulitzer Prize winners, Peabody Award recipients, and professional audiobook narrators whose voices were publicly available through their work in journalism and audio production. Arm Holdings, ticker A-R-M, is under antitrust investigation by the US Federal Trade Commission over its licensing of semiconductor technology. The FTC is probing whether Arm is trying to illegally monopolize parts of the semiconductor market, including whether it will refuse or lower the quality of licenses for blueprints to develop central processing units while ramping up efforts to develop its own chips. Regulators outside the US are also looking into Arm’s practices, spurred in part by a two thousand twenty-four complaint from Qualcomm to the European Commission. That complaint accused Arm of trying to restrict access to licenses and withholding key technology. On the analyst front, Bernstein’s David Dai has initiated coverage of Arm with an Outperform rating and a three hundred dollar price target. Bernstein says Arm is the structural beneficiary of the renaissance of central processing units for agentic artificial intelligence. The ratio of GPU to CPU is shifting from the current eight to one to as low as two to one or even one to one, with the server CPU addressable market expected to quadruple to one hundred thirty-seven billion dollars by two thousand thirty. Bernstein believes Arm stands out in server CPUs given its unparalleled power efficiency. Berkshire Hathaway, ticker B-R-K slash A, has amassed a two point six billion dollar stake in Delta Airlines, reigniting the conglomerate’s complicated relationship with the airline industry. Berkshire said it had purchased thirty-nine point eight million shares in the airline as of the end of March, amounting to a six point one percent stake. This move sent shares of Delta up more than three percent in late trading. During the quarter, Berkshire also boosted its holding in Alphabet, adding thirty-six point four million shares in Google’s parent company, while exiting its bet on Amazon.com. Berkshire also revealed it has amassed a stake in retailer Macy’s. Cerebras, ticker C-R-B-S, will be added to eligible indexes after qualifying for Fast Track IPO Entry, according to an S&P Dow Jones Indices email to clients. Barclays has named artificial intelligence chip startup Fractile and Google DeepMind spinout Isomorphic Labs among Britain’s top AI companies as investors race to back the next generation of UK tech champions. Fractile, founded in Oxford, secured a two hundred twenty million dollar funding round backed by Peter Thiel’s Founders Fund, Accel, and Factorial Funds as it works to develop faster, cheaper AI inference chips. Meanwhile, London-based Isomorphic Labs recently raised two point one billion dollars to accelerate its AI-driven drug discovery platform, one of the largest AI funding rounds seen in Europe this year. Isomorphic Labs, spun out of Google DeepMind in two thousand twenty-one, is using AI to speed up the development of new medicines as pharmaceutical companies increasingly turn to AI to cut costs and shorten research timelines. GoDaddy, ticker G-D-D-Y, saw a significant legal development as a unit of the company wiped out a Delaware federal jury’s finding that its infringement of two patents related to website-building technology was deliberate or reckless. However, GoDaddy failed to overturn a one hundred seventy million dollar verdict against it. Judge Matthew Kennelly partly granted GoDaddy’s renewed motion for judgment as a matter of law and denied its request for a new trial. The November verdict that GoDaddy infringed the patents and failed to prove them invalid remains intact. The judge granted Express Mobile pre- and post-judgment interest, denied enhanced damages, and ordered the parties to submit a proposed final judgment by May twenty-first. Kraken, the cryptocurrency exchange, has cut about one hundred fifty workers to reduce costs and may delay its initial public offering due to a sharp decline in digital-asset prices. The company eliminated the roles after implementing artificial intelligence technology that improved efficiency and is deploying AI more extensively across the business. Kraken’s IPO may now not happen until later this year or even early two thousand twenty-seven, after previously being expected as soon as this spring. The exchange is facing a difficult crypto market, with Bitcoin still down nearly forty percent from its all-time high last October. Rival Coinbase has cut fourteen percent of its staff and Gemini has reduced its workforce by about thirty percent this year. Bank of America has reinstated coverage of ServiceNow, ticker N-O-W, with a Buy rating and a one hundred thirty dollar price target. While artificial intelligence is disrupting the software landscape, the firm thinks ServiceNow stands to benefit from, rather than be replaced by, new AI solutions. The analyst notes that ServiceNow’s depth and breadth of workflow entrenchment uniquely position it to benefit from any deployment of autonomous agents across IT, employee, and customer workflows. OpenAI is making headlines as co-founder and president Greg Brockman is officially taking the reins of the company’s product strategy. According to Wired, Brockman described plans to combine ChatGPT and its programming product Codex into a single unified experience. OpenAI said it has been working to combine ChatGPT, Codex, and its API into a single platform with one core product team. CEO Sam Altman previously declared a “code red” and said the company needs to refocus on the core ChatGPT experience. Rakuten Bank shares surged after Mizuho Financial Group said it is considering investing in the firm as one of the options for Japanese e-commerce giant Rakuten Group’s planned reorganization of its financial businesses. Rakuten Bank shares rose as much as ten point four percent in Tokyo, the biggest gain in three months. Its parent Rakuten Group’s shares fell zero point seven percent after rising as much as four point six percent earlier. Mizuho shares fell as much as seven point seven percent, weighed down also by its move to buy back stock that fell short of analyst estimates. Mizuho, whose bank and securities units are already stakeholders in Rakuten Group’s card and brokerage businesses, is studying various options. Rakuten Group said in February it started discussions to consolidate its bank, card, and brokerage businesses under a single group, expected to happen in October. Publicis Groupe has agreed to buy online data broker LiveRamp Holdings, ticker R-A-M-P, for about two point five billion dollars in cash. This move signals the French media firm’s continued investment in marketing technology as the advertising industry contracts. Publicis is buying LiveRamp for thirty-eight dollars and fifty cents per share, a thirty percent premium to the stock’s closing price on May fifteenth. LiveRamp’s shares jumped more than twenty-five percent in premarket trading on Monday. Publicis shares rose two point one percent to seventy-eight euros and sixty-eight cents in Paris after earlier jumping as much as five point eight percent. The company’s shares have fallen around eleven percent so far this year. The deal is part of a wave of consolidation for ad agencies, which are facing competition from large tech platforms and disruption from artificial intelligence. Publicis has bet on data over traditional creative services, investing in tools for personalizing ads and online commerce, helping it outperform rivals. The LiveRamp transaction represents an enterprise value of two point two billion dollars and includes acquired net cash of three hundred seventy-nine million dollars. The deal should close this year pending regulatory approvals and is expected to add to the headline profits for Publicis, excluding transaction-related costs. Publicis has raised its guidance for net revenues and profit for two thousand twenty-seven and two thousand twenty-eight. LiveRamp, based in San Francisco, has one thousand three hundred employees and offers tools connecting web publishers with data providers. LiveRamp CEO Scott Howe said the deal reflects the strength of their business, the value of their platform, and the strategic role LiveRamp plays in an AI-driven market. Samsung Electronics shares climbed more than six percent after its union signaled a willingness to negotiate and a local court granted the company’s request to curtail a potential strike, reducing the chances of a major chip production disruption. Fresh talks began Monday, with the union’s top leader saying he would sincerely engage with company executives. The union has threatened to begin an eighteen-day strike on Thursday if its demands are not met. Any production halts at Samsung could ripple through the global technology supply chain. Samsung’s shares rose as much as six point seven percent in Seoul, reversing earlier losses. SpaceX is preparing to file publicly for its long-awaited initial public offering as soon as Wednesday, according to people familiar with the matter. Elon Musk’s rocket, satellite, and artificial intelligence company aims to kick off formal marketing as soon as June fourth, price its IPO as early as June eleventh, and list on June twelfth. SpaceX has filed confidentially to go public and is seeking to raise as much as seventy-five billion dollars at a valuation of more than two trillion dollars, which would make it the largest IPO of all time. The company has picked Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley for senior roles on the IPO and has added more banks to the lineup. In addition to its rocket launch business, SpaceX’s satellite-based Starlink internet broadband service operates the largest network of satellites in low-Earth orbit and is a crucial source of revenue. BlackRock is reportedly looking at investing between five and ten billion dollars in SpaceX’s initial public offering next month, according to the Information. BlackRock currently holds a stake in SpaceX worth at least three hundred million dollars, according to public filings, though this is much smaller than the positions held by other large investors such as Fidelity, Baillie Gifford, and Franklin Templeton. SpaceX is executing a five-for-one stock split as it seeks to file publicly for its offering as soon as Wednesday. In the world of venture capital, HSG, the investment firm formerly known as Sequoia Capital China, has closed a three billion dollar continuation vehicle anchored by a stake in ByteDance, according to people familiar with the matter. The move allowed some US investors to exit the highly scrutinized asset. The deal offered new investors a rare opportunity to get exposure to ByteDance, the TikTok parent that for years has faced legal headaches in the US. ByteDance was by far the predominant asset in the fund, and the deal gave it a valuation of about three hundred seventy billion dollars. Some US investors in the earlier HSG fund that held the ByteDance stake used the continuation vehicle to exit. Now, moving to event-driven news. Anglo American has agreed to sell its steelmaking coal mines in Australia to Dhilmar Limited for as much as three point eight eight billion dollars in cash, as the mining company continues to reshape its business. The company will receive an upfront cash consideration of two point three billion dollars, plus price-linked payments of as much as one point five eight billion dollars over five years. This move is part of a broader restructuring plan that includes exiting diamonds, coal, and platinum following a takeover approach from BHP Group in two thousand twenty-four. The steelmaking coal transaction broadly matches an earlier three point eight billion dollar offer from Peabody Energy, which collapsed after a fire at one of Anglo’s mines. Anglo said it will use the proceeds to reduce net debt. Activist investor Elliott Investment Management has built a sizable stake in Bio-Rad Laboratories to boost the firm’s underperforming stock price, according to the Wall Street Journal. The exact size of Elliott’s stake in Bio-Rad, a supplier of life-science tools, was not disclosed. Bio-Rad has a market value of about six point seven billion dollars, and its stock has dropped more than seventy percent since a peak in late two thousand twenty-one. Elliott is also a large investor in Sartorius, a German firm that Bio-Rad backs. Sartorius serves makers of biologic drugs, and Bio-Rad’s stake in Sartorius is valued at about five billion dollars. NextEra Energy is in discussions for a mostly stock deal to acquire Dominion Energy that would value the company at about seventy-six dollars per share, or around sixty-six billion dollars, making it by far the largest power deal on record. NextEra would exchange about zero point eight shares of its stock for each outstanding share of Dominion, with a small cash component. NextEra shareholders would own about seventy-five percent of the combined company. Including debt, the deal would value Dominion at about one hundred sixteen billion dollars. This deal would give NextEra, the biggest US utility by market value, a deeper reach into the PJM Interconnection electric grid, the country’s largest, which includes Virginia and its large concentration of data centers. In the United Kingdom, a dealmaking boom has London’s M&A advisers on track for their best year in more than a decade, despite investor concerns over political instability. The value of mergers and acquisitions targeting UK companies has risen more than two hundred fifty percent this year to around one hundred fifty billion dollars, the highest level for this period since two thousand fifteen. Britain is attracting international buyers due to relatively low valuations, with the FTSE one hundred trading at about thirteen times estimated earnings compared with higher multiples in the US and Europe. Major deals include Unilever’s forty-four point eight billion dollar sale of its food business to McCormick and Schroders’ near ten billion pound sale to Nuveen. The surge in activity is largely driven by foreign acquirers targeting UK assets rather than domestic consolidation. Activist hedge fund Corvex Management is pushing Premier Inn owner Whitbread to put itself up for sale, according to the Financial Times. In a letter to the board, Corvex managing partner Keith Meister said it is imperative that the board makes a public commitment to conduct a rigorous and comprehensive sale process. If Whitbread does not commit to a sale process, Corvex said it would nominate a new slate of directors to the company’s board. Now, let’s look at some notable charts and data points. Markets continue to price in a half-point hike by the end of the year, putting Fed Chairman Warsh in a tough spot, according to Bianco Research. Historical crowding in semiconductor names is in the ninety-ninth percentile, while software crowding is much lower at the twenty-third percentile, according to J.P. Morgan. The value of mergers and acquisitions targeting UK companies is at its highest level in over a decade, according to Bloomberg. In the world of credit, actively managed fixed income exchange-traded funds still outnumber passive, unlike the shift on the equity side, according to Strategas. That wraps up the key markets and headlines for today. Thanks for listening.