Overview
- U.S. equity indexes have posted strong gains recently with the S&P 500 up about 16% since March and the Nasdaq up roughly 25% over two months, leaving prices elevated and vulnerability to shocks.
- April consumer inflation accelerated to 3.8% year‑on‑year and core CPI also picked up, signaling that energy-driven price pressure is spreading to broader goods and services.
- Treasury yields jumped in May as the hotter inflation data strengthened the case for tighter Fed policy and market tools like CME Group’s FedWatch now show at least a 25 basis‑point hike is likely within a year.
- Brent crude remains above $90 a barrel and is more than 50% higher year‑to‑date; reports of a preliminary U.S.‑Iran ceasefire briefly eased prices but damage to Persian Gulf oil infrastructure could delay a full supply rebound for weeks or months.
- Higher government bond yields reduce the present value of future corporate earnings, a link Warren Buffett has stressed, and rising rates can both squeeze valuations and slow earnings as borrowing costs rise.